The Securities Act, 2016

Securities [No. 41 of 2016 857

THE SECURITIES ACT, 2016ARRANGEMENT OF SECTIONS

PART IPRELIMINARY

Section1. Short title2. Interpretation3. Application of Act to shares owned by Government4. Exemption5. Interpretation in other laws to apply6. Relationship with other laws

PART IITHE SECURITIES AND EXCHANGE COMMISSION

7. Securities and Exchange Commission8. Board of Commission9. Functions of Commission10. Commission to regulate foreign capital markets operators

and participants11. Commission to prohibit certain activities by licensed persons12. Commission’s powers over assets of licensed person13. Committees14. Delegation of functions15. Notification of regulatory decisions16. Chief Executive Officer17. Secretary18. Other staff of Commission19. Code of ethics

PART IIILICENSING OF SECURITIES EXCHANGES AND CLEARING AND

SETTLEMENT AGENCIES

20. Establishing and maintaining securities market, securitiesexchanges and clearing and settlement agency

21. Application for securities exchange licence and clearing andsettlement agency licence

22. Consideration and grant of securities exchange licence

Single copies of this Act may be obtained from the Government Printer P.O. Box 30136, 10101 Lusaka. Price K280.00

858 No. 41 of 2016] Securities

23. Consideration and grant of clearing and settlement agencylicence

24. Refusal to grant licence25. Validity of licence26. Variation of licence27. Cancellation or suspension of licence28. Appeals relating to licences

PART IVSELF-REGULATORY ORGANISATIONS

29. Recognition of self-regulatory organisations30. Delegation of powers to self-regulatory organisations31. Rules for self-regulatory organisations

PART VLICENSING AND REGULATION OF CAPITAL MARKETS OPERATORS

32. Licensing of dealers33. Licensing of investment advisers34. Licensing of share transfer agents and representatives35. Regulation of other capital markets operators36. Application for licences37. Consideration and grant of licences38. Conditions for refusal to grant licences39. Validity, terms and conditions of licences40. Variation of conditions of licences41. Revocation of licences42. Annual fee43. Appeals to Tribunal44. Register of licences45. Records kept by licensed person46. Information to be supplied by licensed person47. Annual reports

PART VICREDIT RATING AGENCIES

48. Establishing and operating a credit rating agency49. Consideration and grant of credit rating agency licence50. Refusal to grant licence51. Validity of licence and non-transferability, etc of licence

Section

52. Variation of licence53. Cancellation of licence54. Appeals relating to credit rating agency licence55. Duties of credit rating agency56. Code of Conduct57. Methodologies, models and key rate assumptions58. Disclosures59. Records60. Approval of external credit rating agencies61. Rules for credit rating agencies

PART VIIREGULATION OF SECURITIES EXCHANGES

62. Power of Commission to give direction63. Appeal against direction of Commission64. Power of Minister to suspend business of securities65. Management of securities exchange66. Governance fitness standards67. Exchange rules68. Securities exchanges to assist Commission69. Notification of changes and legal proceedings for misconduct70. Annual reports71. Amendment to exchange rules72. Use of certain titles73. Delegation of powers to securities exchange74. Rules relating to securities exchanges

PART VIIIREGISTRATION OF SECURITIES, REGISTERED SECURITIES AND TRADING

ON SECURITIES EXCHANGE

75. Registration of securities76. Prospectus77. Dealings in securities market not operated by securities

exchange prohibited78. Trading in listed registered securities79. Trading in unlisted registered securities80. Registered securities to be traded through licensed dealers81. Continuing obligations for registered securities82. Dematerialisation and maintenance of securities


Section

83. Fungibility84. Codes of ethics and governance for capital markets85. Contract notes86. Terms of settlement of bargains in securities, etc.87. Short-selling88. Accounts to be kept by licensed persons89. Financial resources rules90. Investment advisory contracts

PART IXREGULATION OF CLEARING AND SETTLEMENT AGENCIES

91. Power of Commission to give directions to clearing andsettlement agency

92. Appeal against direction of Commission93. Power of Commission to suspend business of clearing and

settlement agency94. Notification of changes and legal proceedings for

misconduct95. Annual reports96. Coordination of clearing and settlement agencies97. Asset segregation in securities account98. Exercising control over participant’s account99. Holders of record100. Use of clearing and settlement agency as registered owner

of securities101. Transfer of securities into clearing and settlement agency102. Transfer by record entry103. Effecting transfer of pledge by record entry104. Blocking account by record entry105. Refusal to open account106. Blocking account by court order107. Settlement of securities108. Limitation on rights of participants109. Withdrawal of securities110. Closure of securities register111. Access to clearing and settlement agency records112. Incorrect entry by clearing and settlement agency


Section

113. No liability in extraordinary circumstances114. Insolvency of participant115. Insolvency of clearing and settlement agency116. Utilisation of collateral upon insolvency117. Winding up order118. Netting agreements and procedures119. Rectification of record by Tribunal120. Order of Tribunal

PART XCOLLECTIVE INVESTMENT SCHEMES AND VENTURE CAPITAL FUNDS

121. Authorisation and regulation of schemes122. Restrictions on promotions123. Authorisation of managers, trustees and custodians124. Trustee or custodian to hold property125. Authorisation of foreign schemes126. Revocation of authorisation127. Directions by Commission on revocation of authorisation128. Rules for collective investment schemes129. Authorisation of venture capital fund130. Rules for venture capital fund

PART XIMERGERS AND TAKE-OVERS

131. Scope of Part132. Take-overs or substantial acquisition133. Creation of mergers134. Consideration of applications for proposed take-overs

and mergers135. Power to investigate mergers or take-overs136. Rules on mergers and take-overs

PART XIIINSIDER TRADING

137. Reports by insiders138. Prohibition of insider dealing139. Prohibition on disclosing price-sensitive information140. Offence of insider trading

Section


141. Disgorgement142. Transaction not void or voidable143. Exceptions to insider dealing144. Defence of not soliciting information unavailable145. Presumptions

PART XIIIAUDITING AND CORPORATE RESPONSIBILITIES OF LISTED COMPANIES

146. Filing of annual and periodic reports with Commission147. System of internal control of companies148. Commission to approve auditors of companies149. Duty of auditor to report on internal controls of listed

companies150. Disclosure of quarterly earnings forecasts by listed

companies151. Duty of directors to disclose interests in securities of listed

company152. Register of directors’ interests in securities153. Notification to Commission and securities exchange of

directors’ interests154. Duty of substantial shareholders to disclose shareholdings155. Subsequent disclosures by substantial shareholders156. Registration of substantial shareholders’ shareholdings157. Notification to Commission and listing exchange of

substantial shareholders158. Unclaimed dividends159. Penalties for contravention of Part

PART XIVINFORMATION, INVESTIGATIONS, INSPECTIONS AND CO-OPERATION

160. Power of Commission to request information161. Investigations162. Avoidance of duplication in investigations163. Inspections164. Destruction of documents165. Co-operation with other regulators

Section


PART XVCIVIL LIABILITY

Section166. Liability for misrepresentation in prospectus167. Liability for misrepresentation in other documents168. Defences169. Non-derogation from other rights170. Action for rescission for misrepresentation in prospectus171. Limitations on action172. Leave to proceed173. Notice of action174. Restrictions on discontinuation, etc. of action175. Rights of Commission to bring representative action

PART XVICOMPENSATION FUND

176. Compensation Fund177. Purpose of Fund178. Compensation Fund Committee179. Monies of Fund180. Disbursements from Compensation Fund181. Management of Fund182. Limited liability of Fund and insurance by licensed persons183. Recovery of disbursements from licensed defaulters

PART XVIICAPITAL MARKETS TRIBUNAL

184. Establishment of Tribunal and jurisdiction185. Members of Tribunal186. Tenure of office of members of Tribunal187. Funding and allowances of members of Tribunal188. Appointment and functions of Registrar of Tribunal189. Staff of Tribunal190. Exercise of powers of Tribunal and procedure191. Appeals to Tribunal192. Notice of appeal193. Hearings before Tribunal194. Market misconduct proceedings195. Appeal to Court of Appeal


PART XVIIIOFFENCES ON IMPROPER TRADING PRACTICES

196. Penalty in substitution of penalty units197. Fraudulent transactions198. False trading and manipulation of the market199. Use of deceptive statements, etc. as inducements200. False statements to securities exchange, etc.201. False or misleading statements on sale of securities202. Damages for loss sustained203. Failure to furnish information204. Obstructing Commission, Chief Executive Officer, etc.

PART XIXMISCELLANEOUS PROVISIONS

205. Fraudulent applications206. Designation of compliance officer of licensed person207. Commission’s power over licensed persons208. Association of Capital Markets Operators209. Disciplinary actions210. Review by Commission211. Codes and guidelines212. Guidance notes, etc.213. Access to documents214. Control of advertisements215. Offences committed partly in and partly out of Zambia216. Continuing acts or offences217. Actions by Commission on conviction of offence218. Administrative penalties219. Offence by body corporate or unincorporate body220. General rules by Commission221. Regulations222. Repeal of Securities Act and savings and transitional

provisions

SCHEDULES


An Act to regulate the capital markets so as to foster fairand efficient trading; to continue the existence of theSecurities and Exchange Commission and provide for itsfunctions and powers; to license and regulate securitiesexchanges, clearing and settlement agencies and self-regulatory organisations; to ensure the financial integrityof transactions and avoidance of systemic risk in thecapital markets; to provide for licensing and regulation ofcapital markets operators; to provide for licensing andregulation of credit rating agencies and protect theintegrity, transparency and reliability of the credit ratingprocess and credit ratings; to provide for registration ofsecurities and conduct of securities business; to providefor regulation of collective investment schemes; to prohibitinsider dealing in securities and other offences; to providefor mergers and take-overs of listed companies andcompanies whose securities are registered with theCommission; to provide for auditing and corporateresponsibility of listed companies and companies whosesecurities have been registered with the Commission; tocontinue the existence of the Compensation Fund; toestablish the Capital Markets Tribunal; to repeal andreplace the Securities Act, 1993 ; and to provide formatters connected with or incidental to the foregoing.

[27th December, 2016

ENACTED by the Parliament of Zambia.


Enactment

GOVERNMENT OF ZAMBIA

ACTNo. 41 of 2016

Date of Assent: 19th December, 2016


PART IPRELIMINARY PROVISIONS

1. This Act may be cited as the Securities Act, 2016.

2. In this Act, unless the context otherwise requires—

“ auditor ” has the same meaning assigned to it in theAccountants Act;

“ authorisation ” means any consent, permission, recognitionor capacity given or granted by the Commission to alicensed person—

(a) for carrying on business, a transaction or a series oftransactions as a capital markets operator; or

(b) for doing any act or omitting to do any act incidentalto business, a transaction or a series oftransactions;

whether or not for a specific period;

“ authorised person ” means a person authorised to exercisethe powers of the Commission as specified in this Act;

“ Commission ” means the Securities and ExchangeCommission continued in existence in accordance withsection seven;

“ bank ” has the meaning assigned to it in the Banking andFinancial Services Act;

“ beneficial owner ” means the ultimate owner of securitiesheld in a securities account, excluding a nominee;

“ blocked account ” means an account that belongs to a holderof securities and which is the subject of a pledge, chargeor judgment debt and in which the interest of the chargee,pledgee or judgment creditor has not been satisfied andnotified to a clearing and settlement agency;

“ board ” means a board of a capital markets operator orcompany with registered securities in whom themanagement of the entity is vested;

“ Board ” means the Board of the Commission appointed inaccordance with section eight;

Short title

Interpretation

Act No. 13of 2008

Cap. 387


“ capital markets ” means the market where securities arebought and sold;

“ capital markets operator ” means a person registered,authorised or licensed in accordance with this Act to performspecific functions in the capital markets, including a personor entity, whether incorporated in Zambia or not, who isgranted or receives authorisation from the Commission, anintermediary, nominee or a person conducting a professionaldevelopment or asset management programme;

“ Chief Executive Officer ” means the person appointed asChief Executive Officer of the Commission in accordancewith section sixteen;

“ clearing and settlement ” means the—(a) process of preparing for settlement of a securities

transaction which has been executed on a securitiesexchange;

(b) provision of clearing and settlement facilities; and(c) determination of payment and delivery obligations of

the parties to a securities transaction, whether ornot on a net basis;

“ clearing and settlement agency ” means a company that islicensed in accordance with this Act to—

(a) be a depository of securities for purposes of clearingand settling securities transactions;

(b) provide clearing and settlement facilities;(c) maintain records of trades in securities for purposes

of settling claims for securities;(d) maintain records of transfers and pledges of securities

for purposes of permitting securities to betransferred by record entry; or

(e) hold security certificates deposited for purposes ofpermitting securities to be transferred by recordentry;

excluding a dealer, bank or financial institution actingexclusively in the ordinary course of its business;

“ clearing and settlement agency licence ” means a licencegranted to a company in accordance with section twenty-three;


“ clearing and settlement facility ” means a system ormechanism provided by a clearing and settlement agencyfor the—

(a) holding of securities in dematerialised form;(b) presentation and exchange of data or documents in

order to calculate the obligations of the participantsin the system and to allow for the settlement ofobligations;

(c) transfer of securities; and(d) clearing services or arrangements that mutualise or

transfer among participants the credit risk arisingfrom securities transactions;

excluding a clearing and settlement facility maintained bythe Bank of Zambia, or an entity, facility, system ororganisation that solely arranges or provides for—

(a) settlement, netting or novation of obligations resultingfrom agreements, contracts or transactions on abilateral basis;

(b) settlement or netting of cash payments through aninter-bank payment system; or

(c) settlement, netting or novation of obligations resultingfrom a sale of a commodity;

“ collective investment scheme ” means a scheme in whateverform, including an open-ended investment company, wheremembers of the public are invited or permitted to investmoney or other assets in a portfolio and in terms ofwhich—

(a) two or more investors contribute money or otherassets to, and hold a participatory interest in, aportfolio of the scheme through shares, units orother form of participatory interest; and

(b) the investors share the risk and the benefit ofinvestment in proportion to their participatoryinterest in the portfolio of the scheme or asdetermined in the trust deed;

“ committee ” means a standing or special committee of theCommission established in accordance with sectionthirteen;

“ commodity ” means virtual and non-virtual commodities, suchas agricultural commodities, gold, silver, platinum,gemstones, minerals, carbon credits, emission permits,emission allowances, and includes other products commonlyknown as commodities and which are prescribed by rulesmade by the Commission;

“ company ” has the meaning assigned to it in the CompaniesAct;

“ contract note ” means a document specified in sectioneighty-five;

“control” means the control of a company by a person who—

(a) beneficially owns more than one half of the issuedshare capital of the company;

(b) is entitled to vote a majority of the votes that may becast at a general meeting of the company, or hasthe ability to control the voting of a majority of thosevotes, either directly or through a controlled entityof that person;

(c) is able to appoint or to veto the appointment of amajority of the directors of the company;

(d) is a holding company and the company is a subsidiaryof that company as provided for in the CompaniesAct;

(e) in the case of a company that is a trust, has the abilityto control the majority of the votes of the trustees,to appoint the majority of the trustees or to appointor change the majority of the beneficiaries of thetrust; or

(f) has the ability to materially influence the policy of thecompany in a manner comparable to a person who,in ordinary commercial practice, can exercise anelement of control referred to in paragraphs (a) to(e);

“ Court ” means the High Court for Zambia;

“ credit rating ” means an opinion regarding thecreditworthiness of a licensed person, securities or an issuer;

“credit rating agency” means a person who provides creditrating services as provided in this Act;


Cap. 388

Cap. 388

“ credit rating services ” means the analysis, evaluation,approval, issuing or review of data and information for thepurposes of credit rating;

“ custodian ” means a company authorised, in accordancewith this Act, to have charge or custody of property, papersor other valuables;

“ dealer ” means a person specified in section thirty-two andwho holds a dealer’s licence;

“ dealer’s licence ” means a licence granted to a company inaccordance with section thirty-seven authorising acompany to carry on a business as a dealer;

“ dealing ” means—

(a) acquiring, disposing of, subscribing for or chargingor pledging of, securities;

(b) underwriting securities; or(c) making or offering to make with any person, or

inducing or attempting to induce a person to enterinto or offer to enter into, an agreement relatingto—

(i) the acquisition or disposal of, subscriptionfor or charging or pledging of, securities;or

(ii) underwriting of securities;

“ debt securities ” means debt created or acknowledged inan instrument which is issued or proposed to be issued bya company, including debentures, debenture stock, loanstock, bonds, certificates of deposit, commercial paper andnotes;

“ defalcation ” means a default, act of embezzling, failure tomeet an obligation, misappropriation of trust funds or moneyheld in any fiduciary capacity and failure to properlyaccount for such funds;

“ dematerialised ” means uncertificated securities whichrepresent a share, or other interest in property, of acompany or an obligation of the issuer that is notrepresented by an instrument but is registered on theissuer’s records;


“ depository ” means a place where money or other valuableis placed and kept for safekeeping;

“ disgorgement ” means an act of giving up profits, as a resultof insider dealing obtained in accordance with an order ofthe court issued as specified in section one hundred andforty-one;

“ electronic ” means the use of equipment for processing,digital compressing, storing and transmitting data oremploying wires, radio, optical technology or anyelectromagnetic method for such purpose, and includes anelectronic signature attached to, incorporated in or logicallyassociated with other data and which is intended by theuser to serve as a signature, and “electronically” shall beconstrued accordingly;

“ electronic book entry system ” means an electronicarrangement that permits the holding of securities, whetheror not represented by scrip, and which permits the transferof ownership or interest in those securities by electronicadjustments through securities accounts without physicalmovement or physical exchange of scrip or endorsement,and “book entry” shall be construed accordingly;

“ electronic trading facility ” means a trading facility that—

(a)operates by means of an electronic ortelecommunications network; and

(b) maintains an automated audit trail of bids, offers andthe matching of orders or the execution of securitiestransactions;

“ exchange ” means a securities exchange which is licensedin accordance with section twenty-two;

“ exchange rules ” means rules made by a securities exchangeand approved by the Commission;

“ fit and proper ” means the criteria set by the Commission inaccordance with rules made under section two hundredand twenty-one;

“ foreign collective investment scheme ” means a collectiveinvestment scheme declared to be an authorised scheme inaccordance with section one hundred and twenty-five;


“ Fund ” means the Compensation Fund established inaccordance with section one hundred and seventy-six;

“ insider ” means a person who—

(a) is connected with a listed company in one or moreof the following capacities:

(i) director of the company or of a relatedcompany;

(ii) officer of the company or of a relatedcompany;

(iii) employee of the company or of a relatedcompany;

(iv) independent contractor of the companywho is involved in a professional orbusiness relationship with the company;

(v) shareholder of the company or any personwho has or can be considered to have arelationship with the company orshareholder;

(vi) member of the audit committee of thecompany;

(b) has inside information where the person knows thatthe direct or indirect source of the informationwas a person specified in paragraph (a);

(c) obtains inside information from a person specifiedin paragraph (b); and

(d) by virtue of having been connected with thecompany in any other way, possesses unpublishedprice-sensitive information in relation to thesecurities of the company;

“ insider dealing ” means trading in securities by an insiderfor the benefit of the insider or any other person;

“ investment adviser ” means a person specified in sectionthirty-three and who holds an investment adviser’s licence;

“ investment adviser contract ” means a contract enteredinto between an investment adviser and a client to, provideadvice on the value of securities or investing in securities,or manage an investment or trading account of a client;


“ investment adviser’s licence ” means a licence granted toan investment adviser in accordance with section thirty-seven;

“ investment company ” means a company having, as itspurpose, the investment of its funds with the aim ofspreading investment risk and giving its members the benefitof the results of the management of those funds by or onbehalf of the company;

“ issuer ” means a person or other entity that issues, hasissued or proposes to issue, securities to the public inaccordance with this Act;

“ licence ” means a licence granted in accordance with thisAct and “licensed” shall be construed accordingly;

“ licensed person ” means a person who is granted a licence,as the case may be, in accordance with this Act;

“ listed company ” means a company whose securities havebeen registered with the Commission and which has beenadmitted to trade its securities on a securities exchange;

“ listed securities ” means securities of a listed company;

“ listing exchange ” means the securities exchange on whichlisted securities are traded;

“ listing requirements ” means the requirements, issued by alicensed exchange and approved by the Commission, whichmust be met before securities are listed on the securitiesexchange, traded or continue to be traded on the exchange;

“ manager ” means a person who—

(a) holds a dealer’s or investment adviser’s licence;(b) directs the business, operations and affairs of a

collective investment scheme; and(c) is authorised in accordance with section one hundred

and twenty-three;

“ marked to market ” means re-valued for purposes of theseller’s obligations at the current market value;

“ market misconduct ” includes—

(a) the use or disclosure of price-sensitive informationcontrary to this Act;


(b) engaging in improper trading practices as providedin Part XVIII;

(c) failure to comply with any provision of this Act; and(d) a conviction of an offence under this Act;

“ material change ” means a change in the business,operations, assets or ownership of an issuer that couldreasonably be expected to have a significant effect on themarket price or value of the securities of the issuer, andincludes a decision to implement a change made by theissuer;

“ material fact ” means a fact that significantly affects orcould reasonably be expected to significantly affect themarket price or value of the securities of the issuer;

“ merger ” means an amalgamation of two or more entities,where an entity, directly or indirectly, acquires or establishescontrol over the whole or part of the business of anotherentity or where two or more entities mutually agree to adoptarrangements for common ownership or control over thewhole or part of a business, and includes an acquisition byan entity outside Zambia which affects Zambian entities;

“ misrepresentation ” means—(a) an untrue statement of a material fact; or(b) an omission to state a material fact that is required

to be stated or is necessary to prevent a statementthat is made from being false or misleading in thecircumstances in which it is made;

“ netting ” means the process of reducing multiple obligationsfor fewer settlement obligations or to a single settlementobligation;

“ nominee ” means a person authorised by a beneficial ownerof securities to hold the securities in custody for thatbeneficial owner;

“ officer ” means an employee of the Commission;“ open-ended investment company ” means a company whose

articles of association authorise the acquisition of its ownshares structured in such a manner that it provides for theissuing of different classes of shares to investors, with eachclass of shares representing a separate portfolio having adistinct investment policy;


“ participant ” means a person who receives services froma clearing and settlement agency, other than exclusively—

(a) through another person who is a participant; or(b) as a pledgee, judgment creditor or beneficial owner;

for whom a blocked account in a clearing andsettlement facility has been established;

“ participating clearing bank ” means a bank which is assignedor appointed to provide banking and other facilities, to anexchange, a clearing and settlement agency and membersof an exchange, to facilitate clearing and settlementfunctions;

“ pledge ” means a contractual interest in a security that isdelivered to, retained by, or considered to be in thepossession of, a creditor to secure payment of a debt orother obligation;

“ price-sensitive information ” means a material fact ormaterial change that is not generally available or disclosedin relation to registered securities and if it were generallyknown, would likely materially affect the price of thesecurities;

“ primary market ” means the market in which securities areissued or traded for the first time, including a market wherea company seeks to raise funds from investors in exchangefor the company’s securities;

“ prospectus ” means a notice, circular, brochure,advertisement, publication or request issued in paper orother document, whether electronic or otherwise, invitingapplications or offers from the public to subscribe orpurchase, or offering to the public for subscription orpurchase, a share in or debenture of a company or proposedcompany, and includes a statement attached to or intendedto be read with the prospectus;

“ public body ” means the Government, a Ministry ordepartment of the Government, the National Assembly, alocal authority, parastatal, council, authority, theCommission or other body appointed by the Governmentor established by any other written law;

“ public company ” has the meaning assigned to it in theCompanies Act;


Cap. 388

“ public debt securities ” means loan stock, bonds and otherinstruments creating or acknowledging indebtedness by oron behalf of a public body or central bank;

“ registered owner ” means a person who is, or is presumedto be, shown on the securities register of an issuer as theowner of securities or holds a securities certificate issuedby the issuer;

“ registered securities ” means securities that have beenregistered in accordance with section seventy-five;

“ repealed Act ” means the Securities Act, 1993, repealed inaccordance with section two hundred and twenty-two;

“ reporting issuer ” means an issuer—

(a) who has made an offer of securities, by way of aprospectus, before or after the commencement ofthis Act;

(b) who has made, by way of a merger, take-over orsimilar procedure, an offer for securities;

(c) whose securities are listed on a securities exchangein Zambia; or

(d) who has not less than fifty shareholders;

“ representative ” means a person who is employed by, oracts for, a dealer or an investment adviser and who performsfor that dealer or investment adviser any of the functionsof a dealer or investment adviser, other than the workordinarily performed by accountants, legal practitioners,clerks or cashiers, whether or not remuneration is paid,and holds a representative’s licence;

“ representative’s licence ” means a licence granted inaccordance with section thirty-seven;

“ rules ” in relation to a securities exchange, a clearing andsettlement agency or a self-regulatory organisation meansthe rules governing the members, by whatever name calledand wherever contained, and includes rules contained inthe articles of association of the securities exchange,clearing and settlement agency or self-regulatoryorganisation;

“ Secretary ” means the person appointed Secretary to theCommission in accordance with section seventeen;


Cap. 354

“ securities ” means—(a) shares;(b) debt securities;(c) public debt securities;(d) derivatives;(e) any rights, options or derivatives in respect of any

such shares, debt securities or public debtsecurities;

(f) any rights under a contract to secure a profit oravoid a loss by reference to fluctuations in—

(i)vthe value or price of any shares, debtsecurities or public debt securities;

(ii) the value or price of a group of shares, debtsecurities or public debt securities; or

(iii) an index of shares, debt securities or publicdebt securities;

(g) unit trusts and interests under collective investmentschemes;

(h) commercial paper;(i) depository receipts;(j) warehouse receipts; or(k) any other instrument commonly known as securities

or which are prescribed by rules made by theCommission;

excluding treasury bills, bills of exchange, promissory notes,certificates of deposit issued by a bank, or any otherinstrument prescribed by rules, made by the Commission,not to be securities for the purposes of this Act;

“ securities certificate ” means an instrument issued by, oron behalf of, an issuer that is evidence of an interest insecurities;

“ securities exchange ” means an exchange established andoperated by a company licensed to do so in accordancewith section twenty-two;

“ securities market ” means a place where, or facility,whether electronic or otherwise, by which—

(a) trading in securities is regularly undertaken;


(b) invitations are intended, or may reasonably beexpected, to result, whether directly or indirectly,in securities transactions; or

(c) information is regularly provided on the prices atwhich, or the consideration for which, particularpersons or particular classes of persons propose,or may reasonably be expected, to undertakesecurities transactions;

“ securities transaction ” means the process orsystem through or by which securities aretraded;

“ self-regulatory organisation ” means anorganisation that regulates the operationsand standards of practice and businessconduct of its members and theirrepresentatives and which is recognisedby the Commission in accordance withsection twenty-nine;

“ senior management ” means the chiefexecutive officer, chief financial officerand executive director of a company,licensee or issuer, or any personperforming similar functions;

“ settlement ” means the completion of asecurities transaction, in accordance withthis Act, through the final transfer ofsecurities and monies between the buyerand seller;

“ settlement guarantee fund ” means a fundestablished by a clearing and settlementagency in accordance with paragraph (e)of subsection (1) of section twenty-three;

“ shares ” means an ownership interest or stocksissued or proposed to be issued by acompany in the capital of the company;

“ share transfer agent ” means—(a) a person who, on behalf of an issuer—

(i) creates and maintains the records of holdersof securities issued by an issuer;


(ii) deals with all matters connected with thetransfer, issue, cancellation and redemptionof its securities;

(iii) safeguards securities and funds; and

(iv) distributes dividends; or

(b) a department or division, by whatever name called,of a listed company performing the activitiesreferred to in paragraph (a), if at any time thetotal number of the holders of the company’ssecurities exceed a prescribed amount;

“ short sale ” means a sale of a security that the seller orseller’s principal does not own, or has not contracted for,at the time of sale or which requires the seller to borrowin order to make delivery;

“ subsidiary ” has the meaning assigned to it in the CompaniesAct;

“ substantial shareholder ” means a person who is thebeneficial owner of, or is in a position to exert control over,not less than fifteen percent of the shares of a bodycorporate;

“ take-over ” means the acquisition by a person of sufficientshares in a company to give the acquirer control over thatcompany, and includes an acquisition by a person outsideZambia which affects Zambian companies;

“ take-over bid ” means an offer or invitation to treat madefor the purpose of a take-over as provided in section onehundred and thirty-two;

“Tribunal” means the Capital markets Tribunal established inaccordance with section one hundred and eighty-four;

“ trust deed ” means an agreement drawn up between thetrustees and the managers, or between such personsapproved by the Commission, for purposes of regulatingthe operations of a collective investment scheme, funds,debentures, bonds or other schemes approved by theCommission;

“ trustee ” means a person who is authorised by theCommission in accordance with section one hundred andtwenty-three;


Cap. 388

“ underwriter ” means—(a) a dealer who has temporarily purchased securities

from an issuer with a view to offering or sellingthe securities for the issuer in connection withthe distribution of such securities or participatesor has a direct or indirect participation in any suchundertaking, excluding a person whose interest islimited to a commission from an underwriter or adealer which is not in excess of the usual andcustomary distributor’s or seller’s commission; or

(b) a person who is not a dealer but who obtainsapproval from the Commission to act as anunderwriter in a particular transaction incompliance with rules prescribed by theCommission;

and “ underwriting ” shall be construed accordingly;“ units ” means sub-divisions of a beneficial interest in the

assets of a collective investment scheme or of any otherscheme approved by the Commission;

“ unit trust ” means any scheme or arrangement in the natureof a trust where members of the public are invited orpermitted, as beneficiaries under the trust, to acquire aninterest or undivided share in one or more groups or blocksof specified securities and to participate proportionatelyin the income or profits derived under the trust;

“ unlisted securities ” means securities that are not listed ona securities exchange; and

“venture capital funds” means risk capital by investors tostart-up firms and small and medium sized businesses withperceived high growth potential.

3. Notwithstanding any other provision to the contrary, thisAct shall equally apply to public offerings of securities in a listedcompany owned by the Government.

4. (1) A transaction in government securities traded in theprimary market shall be exempt from this Act.

(2) The Commission may, by notice in the Gazette and a dailynewspaper of general circulation in Zambia, exempt a person orany securities from the application of this Act.


Applicationof Act toshares ownedbyGovernment

Exemption

5. In this Act, unless the context otherwise provides, wordsand expressions used and which are not defined, but are definedin the Companies Act or Banking and Financial Services Act, shallhave the meaning assigned to them in those Acts.

6. Where there is an inconsistency between this Act and anyother written law, the provisions of this Act shall prevail to theextent of the inconsistency.

PART IITHE SECURITIES AND EXCHANGE COMMISSION

7. (1) The Securities and Exchange Commission, establishedin accordance with the repealed Act, is continued in existence asa body corporate, with a common seal, capable of suing and beingsued and, subject to this Act, of performing all such acts as a bodycorporate may by law do or perform..

(2) The First Schedule applies with respect to the Commissionand the Board.

8. (1) There is constituted the Board of the Commission whichshall be responsible for the implementation of this Act and shall,subject to this Act—

(a) exercise the functions of the Commission as provided inthis Act;

(b) oversee the administrative affairs of the Commission byputting in place effective, efficient and transparentsystems of corporate governance and, in doing so,shall—

(i) ensure sound financial management structures andprocesses, including financial, risk managementand internal audit controls;

(ii) provide strategic direction to the Commission andapprove the annual work plan and activityprogrammes of the Commission asrecommended by the Chief Executive Officer;

(iii) ensure that the Commission builds sufficienthuman resource, technical and scientificcapacity within the Commission;

(iv) determine the structure and staffing levels ofthe Commission;


Interpretationin other lawsto applyCap. 388Cap 387

Relationshipwith otherlaws

Securitiesand ExchangeCommission

Board ofCommission

(v) approve the budget estimates of the Commissionand ensure that the Commission receivesadequate funding for its operations;

(vi) ensure the prevention of irregular expenditure,fruitless and wasteful expenditure, lossesresulting from criminal conduct and expenditurenot complying with the operational and financialpolicies of the Commission;

(vii) ensure that the members of the Commission,members of committees and officers act in amanner consistent with the objectives andfunctions of the Commission, the Commission’scorporate governance charter and this Act; and

(viii) ensure that officers perform their functionsefficiently and effectively; and

(c) do every act or thing that is required to be done by theBoard as specified in this Act.

(2) The Minister shall appoint seven persons as non-executivemembers of the Board from a nomination made by each of thefollowing organisations:

(a) Bank of Zambia;(b) Law Association of Zambia;(c) Zambia Institute of Chartered Accountants;(d) Zambia Chamber of Commerce and Industry;(e) Ministry responsible for finance;(f) Ministry responsible for justice; and(g) Pensions and Insurance Authority.

(3) The Chief Executive Officer shall be an ex-officio memberof the Board.

(4) The members of the Board shall elect, from amongst theirnumber, the Chairperson and Vice-Chairperson of the Board.

(5) The Minister shall, when making appointments inaccordance with subsection (2), ensure that fifty percent of eachgender is nominated and appointed as members, unless it is notpracticable to do so.

(6) A person shall not be appointed or hold office as a memberof the Board if the person—


(a) is an undischarged bankrupt;(b) is of unsound mind; or(c) has been convicted of an offence under this Act or of an

offence involving fraud or dishonesty.

9. (1) The Commission shall create and promote conditions inthe capital markets aimed at ensuring an orderly growth, integrityand development of the capital markets.

(2) Notwithstanding the generality of subsection (1), theCommission shall—

(a) ensure compliance with this Act and regulations or rulesmade in accordance with this Act;

(b) license securities exchanges, regulate the activities ofsecurities exchanges and the settlement of securitiestransactions;

(c) license and regulate capital markets operators;(d) license and regulate clearing and settlement agencies and

other participants in the capital markets;(e) license and regulate credit rating agencies and provide

conditions for the issuing of credit ratings;(f) approve the constitutions, charters, articles, by-laws and

rules governing and pertaining to securities exchanges,clearing and settlement agencies and other participantsin the capital markets;

(g) promote and encourage high standards of investorprotection and integrity among members of securitiesexchanges, capital markets operators, clearing andsettlement agencies, self-regulatory organisations andother participants in the capital markets;

(h) support the operation of a free, orderly, fair, secure andproperly informed capital markets;

(i) regulate the manner and scope of securities transactions;(j) regulate margin requirements, capital adequacy requirements,

disclosure and reporting requirements and clearing andsettlement requirements, as may be prescribed;

(k) take all reasonable steps to safeguard the interest ofpersons who invest in securities and guard against illegaland improper practices as provided in this Act;


Functions ofCommission

(l) authorise the establishment of collective investmentschemes and other schemes;

(m) regulate the activities of managers, trustees andcustodians;

(n) authorise and regulate the establishment of venture capitalfunds;

(o) consider and suggest proposals for the reform of this Actand rules and regulations made in accordance with thisAct;

(p) promote and develop a system of self-regulation bysecurities exchanges, clearing and settlement agencies,self-regulatory organisations, other participants in thecapital markets and capital markets operators, as maybe prescribed;

(q) encourage the development of securities and securitiesexchanges and the increased use of such exchanges;

(r) provide, promote or otherwise support financial education,awareness and confidence with regard to financialproducts, institutions and services;

(s) prescribe certification standards and accreditation forlicensees;

(t) co-operate with, provide assistance to, receive assistancefrom, and exchange information with, other regulatorybodies and trade organisations in Zambia and elsewhere;and

(u) exercise and perform such other functions as may beconferred or imposed upon it by or in accordance withthis Act or any other written law.

10. (1) The Commission shall regulate foreign capital marketsoperators and participants operating in the Zambian capital markets.

(2) The Minister shall, by statutory instrument, prescribe thesecurities services that may be provided and the functions andduties that may be performed by foreign capital markets operatorsand participants in the capital markets.


Commissionto regulateforeigncapitalmarketsoperatorsandparticipants

11. (1) The Commission may, in writing, prohibit a licensedperson from doing any of the following:

(a) entering into a securities transaction of a class ordescription specified in the notice or entering into thetransaction otherwise than in circumstances so specifiedor to an extent so specified;

(b) soliciting business from persons of a specified class ordescription or from persons other than persons of sucha class or description; or

(c) carrying on business in a specified manner.(2) A prohibition notified in accordance with this section may

relate to a transaction entered into, in connection with, or for, thepurposes of the business in respect of which the person is licensed.

(3) Where a licensed person refuses to—(a) comply with an order or directive of the Commission made

in accordance with this Act;(b) permit an inspection to be made as provided by this Act

or obstructs such an inspection or where an inspectionis instituted and shows that—

(i) the licensed person concerned conducts its businessin breach of any written law or engages in acourse of conduct that is unsafe or unsound;

(ii) for any reason the licensed person concerned isunable, or is likely to become unable, to continueits operations in the ordinary course of itsbusiness;

(iii) the capital adequacy of the licensed personconcerned is less than the prescribed minimum;or

(iv) the licensed person concerned is insolvent;the Commission shall take supervisory action against thelicensed person.

(4) The supervisory action the Commission may take includes:(a) taking possession of, or appointing a manager to run, the

affairs of the licensed person;(b) suspending the licence of the licensed person for a specified

period not exceeding six months; or(c) cancelling the licence of the licensed person.


Commissionto prohibitcertainactivities bylicensedpersons

12. (1) The Commission may, as regards an asset of a licensedperson, whether in Zambia or elsewhere, by notice in writing—

(a) prohibit the licensed person from disposing of the asset ordealing with the asset in a manner specified in the notice;

(b) require the licensed person to deal with the asset in amanner specified in the notice; or

(c) prohibit the licensed person from pledging securities andother assets as collateral for borrowings.

(2) The Commission may, by notice in writing, require a licensedperson to maintain, in Zambia, assets of such value as appears tothe Commission to be desirable with a view to ensuring that thelicensed person is able to meet that person’s liabilities in respect ofthe business to which that person’s licence relates.

(3) The Commission may, in writing, for the purposes of anyrequirement in this section, direct that assets of a specified class ordescription shall or shall not be taken into account.

13. (1) The Board may, for the purpose of performing itsfunctions, constitute standing and special committees and delegateto the committees such of its functions as it considers necessary.

(2) The Board may appoint as members of a committee,constituted in accordance with subsection (1), persons who are orare not members of the Board, who shall hold office for such periodas the Board may determine.

(3) A meeting of a committee, constituted in accordance withsubsection (1), shall be held at such times and places as thecommittee may determine or as the Board shall direct.

(4) The Board may refer a matter to a committee, constitutedin accordance with subsection (1), for consideration of, or inquiryor management by, the committee.

(5) The Board may appoint a member of a committee to bethe chairperson of the committee.

(6) Where the Board does not appoint a chairperson, inaccordance with subsection (5), the committee shall elect one ofits members to be the chairperson of the committee.

(7) Subject to this Act and any specific or general direction ofthe Board, a committee, constituted in accordance with subsection(1), may regulate its own procedure.


Commission’spowers overassets oflicensedperson

Committees

14. (1) The Board may delegate to a committee or the ChiefExecutive Officer such of the functions of the Commission as theBoard considers necessary or expedient for the better performanceof the functions of the Commission.

(2) The Board may impose such conditions and issue suchguidelines relating to the performance of a function delegated inaccordance with subsection (1).

(3) A delegation made in accordance with this section shallnot prevent the Board from performing the function so delegated.

(4) A person who is directly affected by a decision of acommittee or the Chief Executive Officer made in the performanceof a delegated function may, by notice in writing to the Board,within thirty days after the person has been notified of the decision,request a review of the decision by the Board.

(5) The Board may, after due consideration of the decisionthat was the subject of review, as provided in subsection (4), confirmthe decision or make such other decision as the Board considersappropriate to the case, and shall inform the party requesting thereview of the decision, giving the reasons for the Board’s decision.

(6) Notwithstanding that a person has requested a review of adecision, as provided in subsection (4), the decision under reviewby the Board shall take effect immediately, but the Board maygrant a stay until the review has been disposed of.

15. (1) The Chief Executive Officer shall give notice of, andpublish, prescribed regulatory decisions in such form and manneras the Board may specify.

(2) A notice of a prescribed regulatory decision shall set outthe regulatory decision and the reasons for the decision.

16. (1) The Board shall appoint a Chief Executive Officer ofthe Commission, who shall hold office on such terms and conditionsas the Board shall determine.

(2) The Chief Executive Officer shall be responsible, underthe general direction of the Board, for—

(a) the management and administration of the affairs of theCommission;

(b) the implementation of the decisions of the Board; and(c) any other function assigned or delegated to the Chief

Executive Officer by the Board or in accordance withthis Act.


Delegation of functions

Notificationof regulatorydecisions

ChiefExecutiveOfficer

(3) Except as otherwise provided in this Act, where the Boardhas delegated to the Chief Executive Officer the power to grant,vary, cancel or renew a licence, recognition or authorisation, theChief Executive Officer shall do so in accordance with—

(a) conditions specified in this Act;

(b) regulations issued in accordance with this Act;

(c) guidelines established by the Board;and

(d) any direction, in writing, not inconsistent with this Act,given by the Board.

(4) The Chief Executive Officer shall attend meetings of theBoard as an ex-officio member and may address those meetings,but shall not vote on any matter.

(5) The Chief Executive Officer shall furnish the Minister, onapproval of the Board, such information relating to the activitiesand undertakings of the Commission, as the Minister may require.

17. (1) The Board shall appoint a Secretary to the Board onsuch terms and conditions as the Board shall determine.

(2) The Secretary shall, under the general direction of the ChiefExecutive Officer, be responsible for the corporate secretarial affairsof the Commission.

(3) The Secretary shall perform such other functions asdirected by the Board, under the general supervision of the ChiefExecutive Officer.

18. The Board may appoint, on such terms and conditions asthe Board shall determine, such other professional, administrativeand technical officers, inspectors, and other employees as may benecessary for the performance of the functions of the Commission.

19. (1) The Minister may, by statutory instrument, prescribe acode of ethics for the members of the Board.

(2) The Board shall prescribe a code of ethics for the ChiefExecutive Officer, the Secretary and other staff of the Commission.


Other staffofCommission

Code ofethics

Secretary

PART IIILICENSING OF SECURITIES EXCHANGES AND CLEARING AND

SETTLEMENT AGENCIES

20. (1) A person shall not—

(a) establish or maintain a securities market that is not asecurities exchange in accordance with therequirements of this Act;

(b) establish, maintain or hold out as providing or maintaininga securities exchange unless that person is licensed inaccordance with this Act; or

(c) assist in establishing or maintaining, or hold out as providingor maintaining, or carrying on a business as, a clearingand settlement agency that is not established andoperated by a company licensed in accordance withthis Act.

(2) A person that contravenes this section commits an offenceand shall be liable, on conviction, to a fine not exceeding one millionpenalty units or to imprisonment for a term not exceeding ten years,or to both.

21. (1) A company may apply to the Commission, in theprescribed form and manner, for a licence to establish and operatea—

(a) securities exchange; or(b) clearing and settlement agency.

(2) An application made in accordance with subsection (1)shall be accompanied with a prescribed fee.

(3) The Commission may require an applicant for a licence,as provided in this section, to furnish it with such further informationas the Commission considers necessary for purposes of consideringand granting the licence applied for in accordance with sectionstwenty-two and twenty-three, as the case may be.

(4) If the Commission fails to respond within one hundredand eighty days after receiving a complete application for a license,in accordance with this Part, the application shall be deemed tohave been accepted and the licence applied for duly granted.


Establishingandmaintainingsecuritiesmarket,securitiesexchangeand clearingandsettlementangency

Applicationfor securitiesexchangelicence andclearing andsettlementagencylicence

22. (1) The Commission may, on receipt of an application fora securities exchange licence, as provided in section twenty-one,grant a securities exchange licence to a company, if the Commissionis satisfied that—

(a) the establishment of the securities exchange is necessaryin the public interest, having regard to the nature of thecapital markets;

(b) the applicant has sufficient financial resources, as theCommission may prescribe by rules, for the properperformance of its functions as a securities exchange;

(c) the applicant has, for the proposed securities exchange,at least five members who are engaged in carrying onthe business of dealing in securities independently of,and in competition with, each other;

(d) the rules and practices of the proposed securities exchangeare such as ensure that business conducted by meansof its facilities shall be conducted in an orderly manner,so as to afford proper protection to investors;

(e) the rules of the proposed securities exchange make suchprovisions as the Commission considers satisfactory withregard to—

(i) efficient, honest, fair, competitive and informedtrading in securities;

(ii) the qualifications for membership of the securitiesexchange;

(iii) the exclusion, from membership, of persons whoare not of good character and business integrity;

(iv) the suspension or discipline of members of thesecurities exchange for conduct inconsistentwith just and equitable principles in thetransaction of securities or for contraventionor failure to comply with the rules of theexchange or the provisions of this Act;

(v) the conditions governing securities transactionsby members of the exchange and the class orclasses of securities that may be dealt in by themembers;


Considerationand grant ofsecuritiesexchangelicence

(vi) the carrying on of the business of the exchangetaking into account the interests of the public;and

(vii) the prevention of a member of the exchangefrom resigning where the proposed exchangeintends to investigate any matter affecting thatmember or any of the member’srepresentatives for the purpose of decidingwhether to expel or to take other disciplinaryaction against that member;

(f) the applicant has satisfied the requirements set out in theSecond Schedule; and

(g) the applicant has made such provision as the Commissionconsiders satisfactory for-

(i) the clearing and settlement of dealings in securitiesto ensure the efficient, prompt and accuratesettlement of securities transactions effectedon the proposed exchange, and for therecording of such transactions;

(ii) the effective monitoring and enforcement ofcompliance with its rules, this Act andregulations or rules made in accordance withthis Act;

(iii) investigating complaints in respect of businesstransacted by any of its members; and

(iv) promotion and maintenance of high standards ofintegrity and fair dealings by its members.

(2) The Commission shall not grant a licence to a securitiesexchange, unless the Commission has approved the appointmentof Directors and senior management of a securities exchange.

23. (1) The Commission may, on receipt of an application fora clearing and settlement agency licence, as provided in sectiontwenty-one, grant a clearing and settlement agency licence to acompany, if the Commission is satisfied that—

(a) the establishment of the clearing and settlement agencyis necessary in the public interest, having regard to thenature of the capital markets;


Considerationand grant ofclearing andsettlementagencylicence

(b) the rules of the proposed clearing and settlement agencycontain satisfactory provisions designed to—

(i) develop and operate a prompt and accurate clearingand settlement system;

(ii) safeguard money and securities in its custody orunder its control or for which it is responsible;

(iii) supervise and regulate its participants; and(iv) provide that dealers, financial institutions and other

clearing and settlement agencies may becomeparticipants in the clearing and settlementagency;

(c) the application is supported by a licensed securitiesexchange, to which the company is to provide clearingand settlement facilities;

(d) the clearing and settlement agency shall ensure that, asfar as is reasonably practical, there are fair, transparentand efficient clearing arrangements for securitiestransactions;

(e) the clearing and settlement agency shall put in placemeasures, including the establishment of a settlementguarantee fund, to contain or manage any risksassociated with its business and operations in a prudentmanner;

(f) the clearing and settlement agency shall enforce complianceby its participants with its rules; and

(g) the clearing and settlement agency has sufficient financial,human and system resources to—

(i) establish and operate a fair, transparent and efficientclearing and settlement facility;

(ii) meet contingencies or disasters, including eventssuch as technical complications occurring withautomated systems; and

(iii) provide adequate security arrangements.

(2) The Commission shall not grant a licence to a clearing andsettlement agency unless the Commission has approved theappointment of the Directors and senior management of the clearingand settlement agency.


24. (1) If the Commission is satisfied that an application forthe grant of a licence, made in accordance with section twenty-one, fails to comply with, or is contrary to, the requirements ofsection twenty-two or twenty-three, as the case may be, or theother requirements of this Act or any regulations made inaccordance with this Act, the Commission may, after giving theapplicant an opportunity to be heard, refuse to grant the licence tothe applicant.

(2) Where the Commission refuses to grant a licence to anapplicant, the Commission shall inform the applicant of the reasonsfor the refusal to grant the licence.

25. (1) A licence granted, in accordance with section twenty-two or twenty-three, shall be subject to the terms and conditionsattached to it and shall be valid until revoked, cancelled orsurrendered.

(2) A licence granted, in accordance with section twenty-twoor twenty-three, shall be subject to the payment of an annualprescribed fee and to compliance, by the licensed person, with theconditions of the licence and any provision of this Act or regulationsor rules made in accordance with this Act.

(3) A license granted, in accordance with section twenty-twoor twenty-three, shall not be transferred, assigned or encumberedin any manner.

(4) The Commission may impose such additional conditionson a licence as the Commission considers appropriate for theenforcement of the requirements of this Act and regulations orrules made in accordance with this Act.

26. The conditions of a licence granted in accordance withsection twenty-two or twenty-three may be varied by theCommission after due investigation—

(a) on the operations of the securities exchange or clearingand settlement agency, as the case may be;

(b) in the interest of trade in the capital markets; or(c) in the interest of investor protection.

27. (1) The Commission may, after due investigation, and aftergiving a licensed person the opportunity to be heard, cancel orsuspend a licence granted in accordance with section twenty-twoor twenty-three—


Refusal togrant licence

Validity oflicence

Variation oflicence

Cancellationorsuspensionof licence

(a) in the interest of trade in the capital markets; or(b) due to contravention by the licensed person of this Act or

regulations or rules made in accordance with this Act.

(2) Where the Commission cancels or suspends a licence, inaccordance with this section,the Commission shall issue anotification of such cancellation or suspension in the Gazette and adaily newspaper of general circulation in Zambia.

(3) A cancellation or suspension of a licence, in accordancewith this section, shall not affect the validity of a securities transactionmade before the date of notification in the Gazette and dailynewspaper of general circulation in Zambia.

28. (1) A person aggrieved by a decision of the Commission—(a) to refuse to grant or suspend a licence in accordance

with this Part;(b) relating to any condition imposed on, or varying the

conditions of, a licence; or(c) cancelling a licence;

may, within thirty days after the date of the decision, appealto the Tribunal.

(2) The decision of the Commission shall not be stayed byreason only of an appeal having been lodged with the Tribunal,except that the Tribunal shall, on sufficient ground shown, stay theCommission’s decision.

PART IVSELF-REGULATORY ORGANISATIONS

29. (1) The Commission may, on the application of a self-regulatory organisation, recognise the organisation for purposes ofthis Act, if the Commission is satisfied that it is in the public interestto do so.

(2) Subject to subsection (1), recognition of a self-regulatoryorganisation, by the Commission, shall be in writing and subject tosuch terms and conditions as the Commission may determine.

(3) A self-regulatory organisation shall regulate the operationsand standards of practice and business conduct of its membersand their representatives in accordance with its by-laws, rules,policies, procedures practices and interpretations.


Appealsrelating tolicences

Recognitionof self-regulatoryorganisations

(4) A self-regulatory organisation shall appoint an auditor,approved by the Commission, to audit its financial affairs.

(5) The Commission may, if it is satisfied that it is in the publicinterest, approve a by-law, rule, policy, procedure, practice orinterpretation of a self-regulatory organisation.

(6) A self-regulatory organisation may apply for the voluntarysurrender of its recognition and the Commission may accept thesurrender, subject to such terms and conditions as it may impose, ifthe Commission is satisfied that the surrender of the recognition isnot prejudicial to the public interest.

30. (1) The Commission may, on such terms and conditions asit may impose, assign to a self-regulatory organisation any of thefunctions or powers of the Commission relating to the regulation ofmembers of the self-regulatory organisation.

(2) The Commission may revoke, in whole or in part, adelegation of functions or powers made in accordance withsubsection (1).

(3) A person directly affected by the administration of adirection, decision, order or ruling made in accordance with a by-law, rule, policy, procedure, practice or interpretation of a self-regulatory organisation, may apply to the Tribunal for thedetermination of the direction, decision, order or ruling.

31. Without prejudice to the generality of the Commission’spower to make rules in accordance with this Act, the Commissionmay, by statutory instrument, make the following rules:

(a) the qualifications for membership of a self-regulatoryorganisation;

(b) application for, grant and refusal to grant membership to aself-regulatory organisation;

(c) disciplinary procedures for members that contravene thisAct or regulations or rules made in accordance with thisAct or the rules of the self-regulatory organisation;

(d) the basis on which fees are charged to members, the levelof such fees and the allocation of fees as betweenmembers; and

(e) providing for the protection of investors and themaintenance of the public interest.


Delegationof powers toself-regulatoryorganisations

Rules forself-regulatoryorganisations

PART VLICENSING AND REGULATION OF CAPITAL MARKETS OPERATORS

32. (1) A company which carries on a business, whether asprincipal or agent, by—

(a) making or offering to make with any person, or inducingor attempting to induce any person to enter into, oroffering to enter into, any agreement for, or with a viewto, buying, selling, exchanging, underwriting orsubscribing for, securities;

(b) soliciting or accepting any order for securities; or(c) otherwise transacting in securities, whether electronically

or otherwise;

shall apply for a dealer’s licence in accordance with sectionthirty-six.

(2) A person who is not licensed as a dealer, but deals orunderwrites securities, commits an offence and shall be liable, onconviction, to a fine not exceeding six hundred thousand penaltyunits or to imprisonment for a term not exceeding six years, or toboth.

33. (1) A person who—

(a) engages or holds out as engaging in the provision of adviceon investments in securities, including advice onsubscribing for, or purchasing, selling, exchanging orholding of, securities to any person, a collectiveinvestment scheme or manager of a collective investmentscheme; or

(b) issues analysis or reports for the purposes of facilitatingthe recipients of the analysis or reports to make decisionson whether specific securities may be bought, sold,exchanged or subscribed for;

shall apply for an investment adviser’s licence inaccordance with section thirty-six.

(2) Subsection (1) shall not apply to—

(a) a dealer who gives advice or issues analysis or reports aspart of its business;

(b) a dealer’s representative who gives advice or issues analysisor reports as part of employment with a dealer;


Licensing ofdealers

Licensing ofinvestmentadvisers

(c) a financial institution or insurance company;(d) an advocate or accountant whose advice with respect to

investments is incidental to the practice of theprofession; and

(e) a person who gives advice or issues analysis or reports—(i) in an electronic or print media or any publication,

which is made generally available to the public,and which does not have as its principal or onlyobject, the provision of advice or the issue ofanalysis or reports, concerning securities; or

(ii) in electronic print media for reception by thepublic, whether on subscription or otherwise:

provided the person does not receive commission or otherconsideration for giving or publishing the advice.

(3) Subject to sub-section (2), a person who is not the holderof an investment adviser’s licence and who—

(a) carries on a business as an investment adviser; or(b) holds out as carrying on a business as an investment

adviser;commits an offence and shall be liable, on conviction, to afine not exceeding six hundred thousand penalty units orto imprisonment for a term not exceeding six years, or toboth.

34. (1) Any person who intends to do business as a sharetransfer agent and who—

(a) has the necessary infrastructure, such as adequate officespace, equipment and man-power for the prompt andaccurate clearance and settlement of securitiestransactions;

(b) has capacity to ensure the safeguarding of securities andmonies;

(c) submits, with the application proposed rules with respectto record keeping, reporting, prompt and accuratecreation of securities holders records and thesafeguarding of securities and monies;

(d) fulfills the prescribed capital adequacy requirement;


Licensing ofshare transferagents andrepresentatives

(e) submits, with the application, proposed rules which providefor disciplinary proceedings against its employees,directors, partners or principal officers; and

(f) is a fit and proper person in accordance with prescribedcriteria;

shall apply for a share transfer agent’s licence inaccordance with section thirty-six.

(2) A person shall apply, in accordance with section thirty-six,for a representative’s licence.

(3) A representative’s licence may be conditioned on theapplicant being employed or acting only as the representative of adealer or an investment adviser.

(4) A person who is not the holder of a representative’s licenceand who is employed or acts as a representative, commits anoffence and shall be liable, on conviction, to a fine not exceedingtwo hundred thousand penalty units, or to imprisonment for a termnot exceeding two years, or to both.

35. (1) The Commission shall register, authorise, recognise orlicence any other capital markets operator as may be prescribed.

(2) The Commission shall, by statutory instrument, prescribethe processes and procedures for applying for, and the terms andconditions for, the registration, authorisation, recognition or licensingof other capital markets operators, and the application of this Act,to such capital markets operators.

36. (1) An application for a licence, as specified in sectionsthirty-two, thirty-three and thirty-four shall be made to theCommission, in the prescribed manner and form, and shall beaccompanied by a prescribed fee.

(2) The Commission may require an applicant for a licence toprovide it with such further information as the Commission considersnecessary for the consideration and grant of the licence, inaccordance with the requirements for the licence applied for, asprovided in this Part.

(3) A person who, for the purpose of obtaining a licence inaccordance with this Part, whether directly or indirectly, makesany representation, in writing, orally or otherwise, which is false ormisleading in a material particular, commits an offence and shall beliable, on conviction, to a fine not exceeding six hundred thousandpenalty units or to imprisonment for a term not exceeding six years,or to both.


Regulation ofother capitalmarketsoperators

Applicationsfor licences

37. (1) Subject to section thirty-eight, the Commission shall,within ninety days of receipt of a complete application for the licenceapplied for, in accordance with section thirty-six, grant the licenceif it is satisfied that the applicant shall perform the duties of a licensedperson efficiently, honestly and fairly in accordance with therequirements of the licence, as stipulated in this Part.

(2) If the Commission fails to respond to an application for alicence, within the period prescribed in subsection (1), the applicationshall be deemed to have been granted and the licence applied forduly issued.

38. (1) Notwithstanding section thirty-seven, the Commissionshall not grant a dealer’s licence to an individual.

(2) The Commission shall not grant a representative’s licenceto a company.

(3) Notwithstanding section thirty-seven, the Commission may,after due consideration or investigation, refuse to grant an investmentadviser’s licence to a person on the grounds that the applicant—

(a) has not provided the Commission with such informationrelating to the applicant or any person employed by orassociated with the applicant, or to any circumstanceslikely to affect the method of conducting business, asmay be prescribed in accordance with this Act;

(b) has become incapable, mentally or physically, of performingthe activities to which the licence relates;

(c) is an undischarged bankrupt;(d) or any person employed by, or associated with, the

applicant for the purposes of the activities to which thelicence relates, has been convicted, whether in Zambiaor elsewhere, of an offence involving fraud or dishonesty,or has been convicted of an offence under this Act orregulations or rules, made in accordance with this Act,relating to licensed persons;

(e) is not a fit and proper person to be licensed as an investmentadviser;

(f) shall not perform the duties of a licensed person efficiently,honestly and fairly;


Considerationand grant oflicences

Conditionsfor refusal tograntlicences

(g) is unable to meet such minimum financial, solvency andliquidity requirements or other criteria as may beprescribed by regulations or rules made in accordancewith this Act; or

(h) is under twenty-one years of age, as the case may be.(4) The Commission may, after due consideration or

investigation, refuse to grant a dealer’s licence or investmentadviser’s licence to a company on the grounds that—

(a) the applicant has not provided the Commission with suchinformation relating to it or any person employed by orassociated with it, or to any circumstance likely to affectits method of conducting business, as may be prescribedby or under this Act;

(b) any director of the applicant has become incapable,mentally or physically, of performing the director’s dutieswith respect to the activities to which the applicant’slicence relates;

(c) any director of the applicant is an undischarged bankrupt;(d) the applicant or any director, controller or secretary of

the applicant or any officer concerned in themanagement of the applicant’s business or any employeeof the applicant has been convicted, whether in Zambiaor elsewhere, of an offence involving fraud ordishonesty, or has been convicted of an offence underthis Act or regulations or rules, made in accordancewith this Act, relating to licensed persons;

(e) the applicant is not a fit and proper person to be licensedin accordance with this Part;

(f) there are circumstances which are likely to lead toimproper conduct of business by, or discredit the methodof conducting business of, the applicant;

(g) the applicant shall not perform the duties of a licensedperson efficiently, honestly and fairly; or

(h) the applicant is unable to meet such minimum financial,solvency and liquidity requirements or other criteria asmay be prescribed by regulations or rules made inaccordance with this Act.

(5) Where the Commission refuses to grant a licence inaccordance with this section, it shall notify the applicant, in writing,of the reasons for the refusal.


39. (1) A licence, granted in accordance with section thirty-seven, shall remain valid unless revoked or cancelled by theCommission or surrendered by the licensee.

(2) A licence shall be granted subject to the payment of anannual prescribed fee and compliance, by the licensed person, withthe conditions of the licence and any provision of this Act orregulations or rules made in accordance with this Act.

(3) A license granted in accordance with section thirty-sevenshall not be transferred, assigned or encumbered in any manner.

(4) The Commission may impose such additional conditionson a licence as the Commission considers appropriate for theenforcement of the requirements of this Act or regulations or rulesmade in accordance with this Act.

40. The conditions of a licence, granted in accordance withsection thirty-seven, may be varied by the Commission after dueinvestigations of the activities of the licensed person.

41. (1) Where a licensed person, being—

(a) an individual, dies; or(b) a company, is dissolved;

the licence shall cease to be valid and shall be deemed to have berevoked by the Commission from the date of the death of theindividual or the dissolution of the company, as the case may be.

(2) The Commission may revoke the licence of licensedperson, who is an individual, after due investigation and after givingthe licensed person the opportunity to be heard, where appropriate,if the person—

(a) becomes mentally or physically incapable of performingthe activities to which the licence relates;

(b) becomes bankrupt, or makes a composition or scheme ofarrangement with creditors;

(c) is convicted, whether in Zambia or elsewhere, of anoffence involving fraud or dishonesty;

(d) is convicted of an offence against this Act or regulationsor rules made in accordance with this Act;

(e) is no longer a fit and proper person, as prescribed, to holda licence in accordance with this Part;


Validity,terms andconditions oflicences

Variation ofconditions oflicences

Revocationof licences

(f) is unable to meet such minimum financial, solvency, capitaladequacy or liquidity requirements or other criteria asmay be prescribed by regulations or rules made inaccordance with this Act;

(g) ceases to carry on business in Zambia; or(h) is the holder of a representative’s licence and the licence

of the dealer or investment adviser is revoked orsuspended.

(3) The Commission may revoke the licence of a licensedperson, who is a company, after due investigation and after givingthe company the opportunity to be heard, where appropriate, if—

(a) the company goes into liquidation or is ordered to be woundup;

(b) a receiver or manager for the property of the company isappointed;

(c) the company has ceased to carry on business;(d) a levy of execution in respect of the company has not

been satisfied;(e) the company has entered into a compromise or scheme of

arrangement with its creditors;(f) the licence of a director, secretary or other person

concerned in the management of the company, who isrequired to be licensed in accordance with this Act, hasbeen revoked; or

(g) the company is unable to meet such minimum financial,solvency, capital adequacy and liquidity requirements orother criteria as may be prescribed by regulations orrules made in accordance with this Act.

(4) Subject to subsection (5), the Commission may revoke alicence at the request of a licensed person.

(5) The revocation of a licence, in accordance with this sectionshall not operate so as to—

(a) avoid or affect any agreement, transaction or arrangementrelating to a securities transactions entered into by theperson whose licence has been revoked, whether theagreement, transaction, or arrangement was entered intobefore or after the revocation of the licence; or

(b) affect any right, obligation or liability arising under anyagreement, transaction or arrangement.


(6) A person whose licence is revoked, in accordance withthis section may not apply to be licensed in accordance with thisAct, in any capacity, until the expiration of at least twelve monthsfrom the date of revocation of the licence.

42. A person licensed in accordance with this Act, shall,subject to such conditions as the Commission may prescribe, payan annual fee.

43. (1) A person aggrieved by a decision of the Commission –

(a) to refuse to grant a licence in accordance with this Part;(b) relating to any condition imposed on, or varying the

conditions of, a licence; or(c) revoking a licence;

may, within thirty days after the date of the decision, appeal to theTribunal.

(2) The decision of the Commission shall not be stayed byreason only of an appeal having been lodged with the Tribunal,except that the Tribunal shall, on sufficient grounds shown, staythe Commission’s decision.

44. (1) The Commission shall establish and maintain, in suchform as may be appropriate, a register of licensed persons.

(2) The Commission shall record in the register, established inaccordance with subsection (1)—

(a) the name of the licensed person;(b) in the case of a licensed person which is a company, the

name of each director and secretary of the companyand the names and shares of each shareholder;

(c) the date on which the licence was granted;

(d) the address of the principal place at which the business iscarried on;

(e) the addresses of the other places, if any, at which thelicensed person carries on business;

(f) if the business is carried on under a name or style otherthan the name of the licensed person, that name or style;

(g) particulars of revocation of a licence;


Annualfee

Appeals toTribunal

Register oflicences

(h) in the case of a representative’s licence, the name andaddress of the business of the dealer or investmentadviser in relation to whom the representative islicensed; and

(i) such other matters as may be prescribed.

(3) Any person may, on payment of the prescribed fee, inspectand make copies of, or take extracts from, the register, establishedin accordance with subsection (1).

45. (1) A licensed person shall maintain a record, in theprescribed form, of the securities in which that person has aninterest, within seven days of the acquisition of the interest in thesecurities.

(2) Where there is a change in the interests in securities of alicensed person, that person shall enter in the record, maintained inaccordance with subsection (1), within seven days after the dateof the change, full particulars of the change, including the date andcircumstances relating to the change.

(3) A licensed person shall inform the Commission, in theprescribed manner and form the place at which that person keepsthe record maintained in accordance with subsection (1).

(4) A licensed person, who fails to maintain a record asprovided in this section, commits an offence and shall be liable, onconviction, to a fine not exceeding one hundred thousand penaltyunits or to imprisonment for a term not exceeding twelve months,or to both.

46. (1) A licensed person shall notify the Commission, in writing,of any change that may occur relating to—

(a) the address, in Zambia, at which the licensed person carrieson business; or

(b)any information submitted in the application for a licenceas prescribed by regulations made in accordance withthis Act.

(2) A licensed person who ceases to carry on the businessauthorised by the licence shall, at least six months before that personceases to carry on business or within such shorter period as maybe approved by the Commission, notify the Commission.


Records keptby licensedperson

Informationto besupplied bylicensedperson

(3) Where a person becomes or ceases to be a director of acompany licensed in accordance with this part, the company shall,within one month of the director becoming or ceasing to be adirector, notify the Commission in writing of the change.

(4) A licensed person shall notify the Commission of anymisconduct that has resulted in legal or disciplinary proceedingsbeing taken.

(5) A licensed person shall furnish the Commission with anyadditional information as may be prescribed.

(6) A person who fails to give any notice or supply anyinformation, as provided for in this section, commits an offenceand shall be liable, on conviction, to a fine not exceeding threethousand penalty units for each day that the contravention continues.

47. (1) A company licensed under this Act shall file with theCommission, within ninety days of the date of the company’sfinancial year, an annual report which shall include—

(a) information on the corporate governance policy of thecompany and any other information required by the

Commission;

(b) audited financial statements or other returns as may beprescribed by the Commission; and

(c) audited consolidated financial statements, where thecompany is a holding company or a subsidiary.

(2) The financial statements to be included in an annual report,as specified in subsection (1), shall be audited in accordance withauditing and other standards as provided in the Accountants Act.

(3) An investment adviser who is an individual shall file annualreports with the Commission, within a time and in a manner and

form prescribed by rules issued by the Commission by statutoryinstrument.


Annualreports

Act No. 13of 2003

PART VICREDIT RATING AGENCIES

48. (1) A person who intends to establish and operate a creditrating agency shall apply to the Commission for a licence, in theprescribed manner and form, and pay the prescribed fee.

(2) The Commission shall, in considering an application for alicence to establish and operate a credit rating agency, take intoaccount the following:

(a) the ownership structure, organisational structure and thecorporate governance policy of the proposed credit ratingagency;

(b) the resources and expertise to be used in the performanceof credit rating services;

(c) the procedures and methodologies to be used in determiningcredit ratings;

(d) any conflict of interest that may arise in relation to theissuance of credit ratings by the applicant; and

(e) whether the applicant satisfies the requirements of therules referred to in section sixty-one.

49. (1) The Commission shall, within ninety days of receipt ofa complete application for a credit rating agency licence, made inaccordance with section forty-eight, grant the licence if theCommission is satisfied that the applicant has complied with therequirements of this Act.

(2) If the Commission fails to respond to an application for alicence within the period specified in subsection (1), the applicationshall be deemed to have been granted and the licence applied forduly issued.

50. (1) If the Commission is satisfied that an application forthe grant of a licence, made in accordance with section forty-eight,fails to comply with, or is contrary to, the requirements of this Actor regulations or rules made in accordance with this Act, theCommission may, after giving the applicant an opportunity to beheard, refuse to grant the licence to the applicant.

(2) Where the Commission refuses to grant the licence, asprovided in subsection (1), the Commission shall, within ninety daysof receipt of the application, inform the applicant of the refusal togrant the licence and the reasons for the refusal.


Establishingandoperating acredit ratingagency

Considerationand grant ofcredit ratingagencylicence

Refusal togrant licence

51. (1) A licence granted in accordance with section forty-nine, shall be subject to the terms and conditions attached to it, andshall be valid until revoked, cancelled or surrendered.

(2) A licence granted, in accordance with section forty-nine,shall be subject to the payment of an annual prescribed fee and tocompliance, by the licensed person, with the conditions of the licenceand any provision of this Act or regulations or rules made inaccordance with this Act.

(3) A licence, granted in accordance with section forty-nine,shall not be transferred, assigned or encumbered in any manner.

52. The conditions of a licence, granted in accordance withsection forty-nine, may be varied by the Commission after dueinvestigation—

(a) on the operations of the credit rating agency; or

(b) in the interest of the capital markets.

53. The Commission may, in consultation with relevantregulatory authorities who use or refer to credit ratings in itsregulatory functions, after giving a licensed person the opportunityto be heard, cancel a licence, granted in accordance with sectionforty-nine—

(a) in the interest of the capital markets;(b) due to contravention by the licensed person of this Act or

regulations or rules made in accordance with this Act;(c) if the licensed person contravenes the conditions specified

in the licence; or(d) if the licensed person fails to comply with any directive

issued by the Commission.

54. (1) A person aggrieved by a decision of the Commission—

(a) refusing to grant a credit rating agency licence inaccordance with this Part;

(b) relating to any condition imposed on, or the variation ofthe conditions of, a credit rating agency licence; or

(c) cancelling a credit rating agency licence;

may, within thirty days after receiving the decision, appeal to theTribunal.


Validity oflicence andnon-transferability,etc of licence

Variation oflicence

Cancellationof licence

Appealsrelating tocredit ratingagencylicence

(2) A decision of the Commission shall not be stayed by reasononly of an appeal having been lodged with the Tribunal, except thatthe Tribunal shall, on sufficient grounds shown, stay theCommission’s decision.

55. (1) A credit rating agency licensed in accordance with thisAct shall—

(a) have sound administrative and accounting procedures,internal control mechanisms, effective procedures forrisk assessment and effective control arrangements forinformation processing systems;

(b) protect confidential information made available to it byissuers, including prohibiting its employees from usingsuch information to enter into transactions; or

(c) ensure that it has the necessary knowledge and experienceto issue credit ratings and perform its credit ratingservices.

(2) Each officer of a credit rating agency who fails to complywith this section commits an offence and shall be liable, onconviction, to a fine not exceeding five hundred thousand penaltyunits or to imprisonment for a term not exceeding five years, or toboth.

56. A credit rating agency shall adopt and adhere to a code ofconduct approved by the Commission.

57. (1) A credit rating agency shall—

(a) adopt, implement and enforce adequate measures toensure that credit ratings are based on a thoroughanalysis of all the information that is available to it andrelevant to its analysis according to its ratingmethodologies;

(b) use rating methodologies that are systematic, continousand subject to validation on historical experience,including back-testing;

(c) regularly review its methodologies, models and key ratingassumptions; and

(d) establish internal arrangements to monitor the impact ofchanges in macro-economic or capital marketsconditions on credit rating.


Duties ofcredit ratingagency

Code ofconduct

Methodologies,models andkey rateassumptions

(2) A person or an officer of the Commission shall not hinder,interfere, obstruct or improperly attempt to influence a credit rating,the content of a credit rating, or any methodology, model or keyassumption used by a credit rating agency to derive a credit rating.

(3) A person who contravenes subsection (2) commits anoffence and shall be liable, on conviction, to a fine not exceedingfive hundred thousand penalty units or to imprisonment for a termnot exceeding five years, or to both.

58. A credit rating agency shall, on the request of an interestedperson, make available, free of charge, for inspection—

(a) the practices, procedures, processes, methodologies,models and key rating assumptions it uses in its creditratings and credit rating services;

(b) its code of conduct;(c) the general nature of its compensation arrangements; and(d) its policy on publishing credit ratings and other related

communication.

59. A credit rating agency shall cause to be kept, for a periodof ten years, records and audit trails of its credit rating services.

60. (1) The Commission may approve a credit rating agencythat is authorised, licensed or registered by a foreign regulatoryauthority to perform credit rating services, subject to compliancewith this Act and rules and regulations made in accordance withthis Act and such terms and conditions as the Commission maydetermine.

(2) A credit rating agency shall apply to the Commission, in theprescribed form and manner for the approval of a credit ratingagency that is authorised, licensed or registered by a foreignregulatory authority and whose credit ratings it intends to endorse.

(3) The Commission shall require a credit rating agency that isauthorised, licensed or registered by a foreign regulatory authorityto provide the Commission with such information as the Commissionconsiders necessary to monitor, on an onging basis, compliancewith this Act and rules and regulations made in accordance withthis Act.


Disclosures

Records

Approval ofexternalcredit ratingagencies

61. (1) Without prejudice to the generality of the Commission’spower to make rules in accordance with this Act, the Commissionmay, by statutory instrument, make rules relating to all credit ratingagencies, including credit rating agencies authorised, licensed orregistered by a foreign regulatory authority, with respect to thefollowing:

(a) organisational requirements for credit rating agencies;(b) quality and integrity of credit ratings;(c) presentation of credit ratings;(d) disclosures;(e) fraudulent and misleading advertising, canvassing and

marketing;(f) the responsibilities of credit rating agencies to investors

and the public; and(g) any matter that is required to be prescribed in terms of

this Act.

(2) Without prejudice to subsection (1), the Commission maymake different rules for locally established credit rating agenciesand credit rating agencies authorised, licensed or registered by aforeign regulatory authority or for different aspects of the provisionsspecified in subsection (1).

PART VIIREGULATION OF SECURITIES EXCHANGES

62. (1) Where the Commission is satisfied that an exchangehas ceased to meet the conditions, referred to in section twenty-two, or that there is adequate evidence requiring the protection ofinvestors, or for the proper regulation of trade on the securitiesexchange, the Commission may give directions with respect to—

(a) trading on or through the facilities of the exchange generallyor of a particular security listed on the exchange;

(b) the manner in which the exchange carries on any aspectof its business or administration; or

(c) any other matter that the Commission considers necessaryfor the effective administration of, and compliance with,this Act and regulations and rules made in accordancewith this Act.


Rules forcredit ratingagency

Power ofCommissionto givedirection

(2) A director or officer of a securities exchange who fails tocomply with a direction given, in accordance with this section,commits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units or to imprisonmentfor a term not exceeding five years, or to both.

63. (1) A securities exchange that is dissatisfied by a directionof the Commission, given in accordance with section sixty-two,may, within thirty days after the direction is given, appeal to theTribunal.

(2) The Tribunal may confirm, quash or vary the direction ofthe Commission.

(3) The Tribunal’s decision shall be final and binding, except incases in which an appeal to the Court is allowed.

(4) The Commission’s direction shall not be stayed by reasononly of the lodgement of an appeal, pending the decision of theTribunal, and it shall be the duty of the Commission to give effectto the Tribunal’s decision.

64. (1) The Minister may, after consultation with theCommission, on the grounds specified in subsection (2), direct thata securities exchange suspends the transaction of dealings insecurities for such period as may be specified in the direction.

(2) A direction, provided for in subsection (1), may only begiven if the Minister is satisfied that the orderly transaction ofbusiness on the securities exchange is being or is likely to beprevented due to the following:

(a) a natural disaster has occurred in Zambia; or(b) an economic or financial crisis or other like circumstance,

whether in Zambia or elsewhere, has occurred.

(3) A securities exchange which allows a dealer to deal insecurities while a direction is in force, as provided in this section,commits an offence and shall be liable, on conviction, to a fine notexceeding one hundred thousand penalty units.

(4) A securities exchange which allows a participant in thecapital markets to participate in the securities market while adirection is in force, as provided in this section, commits an offenceand shall be liable, on conviction, to a fine not exceeding one hundredthousand penalty units.


Appealagainstdirection ofCommission

Power ofMinister tosuspendbusiness ofsecurities

(5) The Commission may take such steps as it considersnecessary to ensure compliance with a direction, given inaccordance with this section, and may cause the premises of thesecurities exchange affected by the direction to be locked andsecured.

65. (1) The affairs of a securities exchange shall be managedby a board whose members shall, subject to approval of theCommission, be elected or appointed in accordance with its articlesof association.

(2) The board of a securities exchange shall ensure that theexchange is operated in compliance with this Act, rules andregulations made in accordance with this Act and its exchangerules and shall—

(a) be responsible for the general oversight of the affairs ofthe exchange;

(b) oversee the administrative affairs of the exchange in orderto ensure sound financial management structures andprocesses; and

(c) ensure compliance with continuing obligations providedfor in the Second Schedule and with regulations andrules made in accordance with this Act, and with itsexchange rules.

(3) The members of the board of a securities exchange shallindividually and collectively be responsible for any non-compliancewith the provisions of this Act and rules and regulations made inaccordance with this Act and its rules.

(4) A person directly affected by the administration of adirection, decision, order or ruling made, in accordance with a by-law, rule, policy, procedure, practice or interpretation of a securitiesexchange rule, may apply to the Tribunal for a determination of thematter.

66. A securities exchange shall establish and enforceappropriate fitness standards for members, directors, members ofa disciplinary committee and any other person with direct accessto the securities exchange.

67. (1) Subject to the approval of the Commission, a securitiesexchange may make such rules as it considers necessary ordesirable for the proper and efficient regulation, operation,management and control of the securities exchange.


Managementof securitiesexchange

Governancefitnessstandards

Exchangerules

(2) A rule of a securities exchange shall have no effect unlessit has been approved, in writing, by the Commission.

68. A securities exchange shall provide such assistance to theCommission, as the Commission may reasonably require, for theperformance of its functions and duties, including the furnishing ofsuch returns and information relating to its business or in respect oftransactions in securities and any other specified information asthe Commission may require for the proper enforcement of thisAct.

69. (1) A securities exchange shall notify the Commission, inwriting, of any change that may occur relating to—

(a) the address, in Zambia, at which the securities exchangecarries on business; or

(b) any information submitted in the application for a securitiesexchange licence, as prescribed by this Act or regulationsmade in accordance with this Act.

(2) A securities exchange that intends to cease to carry on thebusiness authorised by the licence shall immediately notify theCommission of such intention and shall not cease to conduct businessuntil the securities exchange develops and implements measuresapproved by the Commission for the protection of investors.

(3) Where a person becomes or ceases to be a director of asecurities exchange the company shall, within one month of theDirector becoming or ceasing to become a director, notify theCommission in writing of the change.

(4) A securities exchange shall notify the Commission of anymisconduct that has resulted in legal or disciplinary proceedingsbeing taken.

(5) A securities exchange shall furnish the Commission withany additional information, relating to the matters provided for inthis section, as may be prescribed.

(6) A securities exchange which fails to give any notice orsupply any information, as provided for in this section, commits anoffence and shall be liable, on conviction, to a fine not exceedingthree thousand penalty units for each day that the contraventioncontinues.

70. (1) A securities exchange shall file with the Commission,within ninety days of the date of its financial year, an annual reportwhich shall include—


Securitiesexchanges toassistCommission

Notificationof changesand legalproceedingsformisconduct

Annualreports

(a) information on the corporate governance policy of thesecurities exchange and any other information requiredby the Commission;


(c) audited consolidated financial statements, where thesecurities exchange is a holding company or a subsidiary.

(2) The financial statements, to be included in an annual report,as specified in subsection (1), shall be audited, in accordance withauditing and other standards as provided in the Accountants Act.

71. (1) A securities exchange that wishes to make anamendment to its rules, whether by way of rescission, alteration oraddition, shall submit a draft of the proposed amendment to theCommission for approval.

(2) The Commission may, within forty-five days after receiptof a draft of a proposed amendment, submitted in accordance withsubsection (1), by notice to the securities exchange, allow theamendment to be made to the rules or disallow the amendment,whereupon the amendment shall not be made to the rules.

(3) If the Commission fails to issue a notice, within the periodprescribed in subsection (2), the proposed amendment shall bedeemed to have been approved, except that any period used toclarify issues relating to the rules shall not be counted.

72. A person, other than a licensed securities exchange, whotakes or uses, or has attached to, or exhibited at, any place—

(a) the title “securities exchange” or “stock exchange”; or(b) any title which so closely resembles either of the titles

specified in paragraph (a) as to be likely to deceive;commits an offence and shall be liable, on conviction, to a fine notexceeding two hundred thousand penalty units or to imprisonmentfor a term not exceeding one year, or to both.

73. (1) The Commission may, on such terms and conditions asit may impose, assign to a securities exchange, in writing, any of itsfunctions and powers, as the Commission considers appropriatefor the effective operation of the exchange.


Act No. 13 of 2003

Amendmentto exchangerules

Use ofcertain titles

Delegationof powers tosecuritiesexchange

(2) The Commission may revoke, in whole or in part, anassignment of functions and powers made in accordance withsubsection (1).

74. Without prejudice to the generality of the Commission’spower to make rules, in accordance with this Act, the Commissionmay, by statutory instrument, make the following rules:

(a) the conditions subject to which, and the circumstances inwhich, any exchange may suspend securitiestransactions;

(b) the qualifications for membership of an exchange and theminimum number of persons that are required to beadmitted to membership of a securities exchange;

(c) the basis on which fees are charged to members, the levelof such fees and the allocation of fees as betweenmembers;

(d) the type of business that may be carried on and servicesthat may be provided by or at a securities exchange;

(e) prescribing the requirements to be met before securitiesare listed on a securities exchange or traded on asecurities exchange;

(f) prescribing the procedure for dealing with applications forthe listing of securities;

(g) providing for the cancellation or suspension of the listingof any specified securities, if the Commission’srequirements for listing or trading on the securitiesexchange are not complied with;

(h) the cancellation or suspension of the listing of any specifiedsecurities, if the Commission considers that such actionis necessary to maintain an orderly securities market ;and

(i) prescribing the free float to be maintained by a listed entityon each securities exchange.

PART VIIIREGISTRATION OF SECURITIES, REGISTERED SECURITIES AND TRADING

ON SECURITIES EXCHANGE

75. (1) An issuer of securities or its representative shall filewith the Commission, a statement, in the prescribed form, for theregistration of the securities it proposes to issue to the public inZambia, which shall be accompanied by the prescribed fee, andsuch registration shall be valid for such period as may be prescribed.


Rulesrelating tosecuritiesexchanges

Registrationof securities

(2) Subject to subsection (3), the Commission may approve astatement for the registration of securities, filed in accordance withsubsection (1), and register the securities.

(3) If the securities—

(a) of a public company are publicly traded or, directly orindirectly, promoted or advertised or offered for sale tothe public in contravention of this section; and

(b) have not been registered, in accordance with this section,and are not guaranteed by the Government or exemptedin accordance with this Act, from the requirements ofthis section;

the issuer commits an offence and shall be liable, on conviction, toa penalty not exceeding two hundred thousand penalty units.

(4) For the purposes of this section, securities of a publiccompany shall be treated as being publicly traded if—

(a) the company has more than fifty shareholders; or

(b) the Commission, by notice in writing to the issuer, hasdeclared that, after ninety days, those securities shallbe treated as being publicly traded, and ninety days haselapsed since that notice was given.

(5) Unless a company proceeds to list the registered securitieson a securities exchange, a registration made, in accordance withsubsection (1), shall remain valid for such period as the Commissionmay, by statutory instrument, prescribe.

76. A prospectus prepared for the purposes of any public offerto be made in relation to securities that are registrable, in accordancewith section seventy-five shall contain or be accompanied by—

(a) such information as investors and their professionaladvisers would reasonably require and expect to find inthe prospectus for the purpose of making an informedassessment of the assets and liabilities, financial position,profits and losses and prospects of the issuer of thesecurities and the rights attaching to the securities; and

(b) such other information, particulars, and requirements asmay be prescribed by regulations made in accordancewith this Act.


Prospectus

77. (1) A dealer who transacts in securities at or through asecurities market which is not operated by a securities exchangecommits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units or to imprisonmentfor a term not exceeding five years, or to both.

(2) This section shall not apply to any dealings of a kind ordescription prescribed by regulations or rules made in accordancewith this Act.

78. A person who transacts in any registered securities, otherthan on the securities exchange on which the securities are listed,commits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units or to imprisonmentfor a term not exceeding five years, or to both.

79. (1) A person who intends to transact in a Governmentsecurity or a registered security that is not listed on any securitiesexchange shall report that transation to a securities exchange.

(2) A person who transacts in a Government secruity or aregistered security that is not listed on any securities exchange andwho fails to report that transaction to a securities exchange, commitsan offence and is liable, upon conviction, to a fine not exceedingfive hundred thousand penalty units, or imprisonment for a termnot exceeding five years, or to both.

(3) The Commission may, by notice to every dealer, declarethat any securities specified in the notice, being securities which, inthe opinion of the Commission, are being actively traded shall bedealt with as if the securities were listed securities.

80. (1) A person who deals in any registered securities shallonly trade through a dealer.

(2) A person who contravenes subsection (1), commits anoffence and shall be liable, on conviction, to a fine not exceedingfive hundred thousand penalty units or to imprisonment for a termnot exceeding five years, or to both.

(3) This section shall not apply to any dealings of a kind ordescription prescribed by regulations made in accordance with thisAct.

81. (1) An issuer shall, once registered securities are listed,keep the public informed of all matters which affect the value ofthe securities immediately upon their becoming known to thedirectors of the issuer, by placing an advertisement in a newspaperof general circulation or in other media approved by the Commissionand shall submit reports to the Commission and to the securitiesexchange on which those securities are listed.

Dealings insecuritiesmarket notoperated bysecuritiesexchangeprohibited

Trading inlistedregisteredsecurities

Trading inunlistedregisteredsecurities

Registeredsecurities tobe tradedthroughlicenseddealers

Continuingobligationsfor registeredsecurities


(2) The Commission may require an issuer of securitiesregistered in accordance with section seventy-five to submit suchinformation as the Commission may reasonably require for theproper performance of its functions under this Act.

(3) Regulations, made in accordance with this Act, mayprescribe further obligations to be met by the issuers of registeredsecurities.

(4) An issuer that neglects or fails to comply with this sectionor regulations, made in accordance with this section, commits anoffence and shall be liable, on conviction, to a fine not exceedingfifty thousand penalty units.

82. (1) On the commencement of this Act—

(a) any new issue of securities to be traded on a securitiesexchange shall be issued in a dematerialised form;

(b) the electronic record of a clearing and settlement agencyshall constitute the record of an issuer in respect ofsecurities held in a clearing and settlement agency forthat issuer and, in case of any discrepancy between theissuer’s record and the record of the clearing andsettlement agency, the latter shall prevail; and

(c) a clearing and settlement agency register shall constitutethe register of all securities in the securities accounts ofits account holders.

(2) The Commission may, by statutory instrument, make rulesfor the elimination of scrips in order to give effect to thedematerialisation of securities.

(3) Every securities account, in a clearing and settlementagency, shall be in the name of the beneficiary owner of thesecurities that have been deposited in the securities account or inthe name of a nominee and in such form as may be prescribed bythe rules of the clearing and settlement agency.

(4) All securities deposited in a securities account shall beregarded as negotiable instruments.

83. Securities of the same class, issued by the same issuer,are interchangeable and shall be regarded as a collection of oneclass of securities.

Demateriali-sation andmaintenanceof securities

Fungibility


84. (1) The Commission may prescribe codes of ethics andcorporate governance for the capital markets.

(2) Where any contract for the sale of securities is enteredinto in contravention of the code of ethics or the code of corporategovernance, prescribed in accordance with subsection (1), thecontravention shall be actionable at the suit of any person whosuffers loss as a result of the contravention.

85. (1) A dealer shall, in respect of every contract for thepurchase, sale or transfer of an interest in securities in thesecondary market, entered into, whether as principal or agent, notlater than the end of the next trading day after the contract wasentered into, make out a contract note which complies withsubsection (2) and—

(a) where the contract was entered into by the dealer asagent, deliver the contract note to the person on whosebehalf it entered into the contract; or

(b) where the contract was entered into by the dealer asprincipal, retain the contract note.

(2) A contract note shall include—

(a) the name or style under which the dealer carries onbusiness and the address of the principal place at whichit carries on the business;

(b) where the dealer is acting as principal, a statement that itis so acting;

(c) the name of the person, if any, to whom the dealer isrequired to give the contract note;

(d) the date of the contract and the date on which the contractnote is made out;

(e) the quantity and description of the securities which arethe subject of the contract;

(f) except in the case of a securities exchange, the price perunit of the securities;

(g) the amount of consideration payable under the contractor, in the case of a transfer of an interest in securities,sufficient particulars of the securities transferred;


Codes ofethics andgovernancefor capitalmarkets

Contractnotes

(h) the rate or amount if any, payable in respect of the contract;(i) the date of settlement; and(j) such other information as may be prescribed by regulations

made in accordance with this Act, to ensure a completeaudit trail for the execution of customer instructions andsettlement of securities transactions.

(3) A dealer who completes a contract for the purchase, sale ortransfer of an interest in securities in the secondary market withouthaving complied with this section commits an offence and shall beliable, on conviction, to a fine not exceeding fifty thousand penaltyunits.

(4) A disclaimer or exclusionary clause in a contract note forpurposes of ousting the provisions of this section shall have nolegal effect.

86. The Commission may, by statutory instrument, make rulesfor the regulation of the terms upon which bargains in securitiesare settled and may thereby prohibit or restrict forward transactionsor option contracts.

87. (1) A person who short-sells securities at or through asecurities exchange, commits an offence, unless at the time of thesale—

(a) the person or the person’s principal has a presentlyexercisable and unconditional right to vest the securitiesin the purchaser of the securities;

(b) the person or that person’s principal has deposited, in themanner prescribed, one hundred percent collateralagainst the short-sale, marked to market at the close ofevery trading day until the transaction is complete;

(c) the person or that person’s principal owns another securityconvertible into the securities sold or an option or rightto acquire the securities sold and, within ten days afterthe sale, exercises the conversion privilege, option orright and delivers the security, so acquired, to thepurchaser or transfers the convertible security, optionor right to the purchaser of the security; or

(d) the person has entered into a fully secured andunconditional borrowing agreement or arrangementpursuant to which that person shall be able to deliverthe securities for settlement in accordance with the rulesof the relevant securities exchange.


Terms ofsettlement ofbargains insecurities,etc.

Short-selling

(2) A person who contravenes this section commits an offenceand shall be liable, on conviction, to a fine not exceeding five hundredthousand penalty units or to imprisonment for a term not exceedingfive years, or to both.

(3) The Commission may, by statutory instrument, make rulesregulating short-sales.

88. (1) A licensed person, who is dealer or investment adviser,shall keep or cause to be kept such accounting and other recordsas shall sufficiently explain the securities transactions and financialposition of all business relating to the licence and enable true andfair profit and loss accounts and balance sheets to be prepared andshall cause such records to be kept in a manner and form prescribedas to enable the accounts to be conveniently and properly audited.

(2) Without limiting the generality of subsection (1), eachlicensed person, specified in subsection (1), shall maintain suchbooks and records for a period of ten years after the settlement orconclusion of a securities transaction and shall file such reports inthe prescribed manner and form.

(3) A person who contravenes this section commits an offenceand shall be liable, on conviction, to a fine not exceeding fiftythousand penalty units.

89. (1) The Commission may issue rules prescribing financialresources to be maintained by a person licensed in accordancewith this Act.

(2) Rules, made in accordance with subsection (1), may—(a) impose requirements which are absolute or which may be

varied by reference to factors specified in the rules;(b) impose requirements which take account of any business

carried on in respect to the businesses which the dealeror investment adviser is licensed for; and

(c) make provision as to the assets, liabilities and other mattersto be taken into account in determining a dealer’s orinvestment adviser’s financial resources and the extentto which, and the manner in which, they are to be takeninto account.

90. (1) An investment adviser shall not enter into an investmentadvisory contract or extend, renew or perform an investmentadvisory contract entered into, extended or renewed after thecommencement of this Act, if the contract—


Accounts tobe kept bylicensedpersons

Financialresourcesrules

Investmentadvisorycontracts

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(a) provides for remuneration to be paid by the client to theinvestment adviser on the basis of a share of capitalgains of the funds or any part of the funds of the client;

(b) does not include a provision stating that an assignment ofthe contract by the investment adviser shall be madeonly with the consent of the client; or

(c) does not include a provision stating that the investmentadviser—

(i) if the investment adviser practices in partnershipwith one or more other investment advisers, shallnotify the client of any change in the partnershipwithin a reasonable time after the change; or

(ii) if a company, shall notify the client of any changein the directors of the company, within areasonable time after the change.

(2) Notwithstanding anything to the contrary, paragraph (a)of subsection (1) shall not apply to an investment advisorycontract—

(a) which provides for remuneration based on the total valueof a fund averaged over a definite period or on definitedates or taken on a definite date; or

(b) with respect to participation in a collective investmentscheme, in accordance with Part X, that provides forremuneration based on the asset value of the scheme,or company under management, averaged over aspecified period and increasing and decreasingproportionately in accordance with the performance ofthe scheme or company over a specified period in relationto—

(i) the investment record of an appropriate index ofsecurities; or

(ii) such other measure of investment performance,as the Commission may approve or on theapplication of either party to an investmentadvisory contract or intended contract.

(3) An investment advisory contract entered into incontravention of this section shall, notwithstanding any provisionof the contract, be voidable at the option of the client.

N.A.B. 26, 2016


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(4) An investment adviser who knowingly enters into aninvestment advisory contract in contravention of this section,commits an offence and shall be liable, on conviction, to a fine notexceeding fifty thousand penalty units.

PART IXREGULATION OF CLEARING AND SETTLEMENT AGENCIES

91. (1) Where the Commission is satisfied that it is necessaryin the public interest and proper operations of the affairs of a clearingand settlement agency, the Commission may give directions withrespect to—

(a) the manner of clearing and settlement through the facilitiesof the clearing and settlement agency generally or ofparticular listed securities listed or traded on listed ortrade on the securities exchange;

(b) the manner in which the clearing and settlement agencycarries on any aspect of its business or administration;

(c) the persons or class of persons who may be participantsin the clearing and settlement agency; or

(d) any other matter that the Commission considers necessaryfor the effective administration of, and compliance with,this Act or regulations or rules made in accordance withthis Act.

(2) A director or officer of any clearing and settlement agencywho neglects or fails to comply with a direction, given to it, inaccordance with this section, commits an offence and shall be liable,on conviction, to a fine not exceeding five hundred thousand penaltyunits or to imprisonment for a term not exceeding five years, or toboth.

92. (1) A clearing and settlement agency that is dissatisfiedwith a direction given by the Commission, in accordance with sectionninety-one, may, within thirty days after the direction is given, appealto the Tribunal.

(2) The Tribunal’s decision shall be final and binding on allparties, including the Commission, except where an appeal to theCourt is allowed.

(3) A direction given by the Commission shall not be stayedby reason only of an appeal having been lodged with the Tribunal,but the Tribunal shall, on sufficient grounds shown, stay theCommission’s decision.

N.A.B. 26, 2016


Power ofCommissionto givedirections toclearing andsettlementagency

Appealagainstdirection ofCommission

93. (1) The Commission may, on the grounds specified insubsection (2), direct that a clearing and settlement agency suspendtransactions in securities for such period as may be specified inthe direction.

(2) A direction, provided for under subsection (1), may onlybe given if the Commission is satisfied that the orderly transactionof business in the clearing and settlement agency is being or islikely to be prevented due to the following reasons:

(a) a natural disaster has occurred in Zambia;(b) an economic or financial crisis or other like circumstance,

whether in Zambia or elsewhere has occurred; or(c) the clearing and settlement agency has ceased to meet

the conditions set out in section twenty-three.(3) A clearing and settlement agency which allows a participant

in the capital markets to participate in the clearing and settlementagency while a direction is in force, as provided in this section,commits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units.

(4) The Commission may take such steps as it considersnecessary to ensure compliance with a direction, given inaccordance with this section, and may cause the premises of theclearing and settlement agency affected by the direction to belocked and secured.

94. (1) A clearing and settlement agency shall notify theCommission, in writing, of any change that may occur relating to—

(a) the address, in Zambia, at which the clearing and settlementagency carries on business; or

(b) any information submitted in the application for a licence,as prescribed by regulations made in accordance withthis Act.

(2) A clearing and settlement agency which ceases to carryon the business of a clearing and settlement agency shall, at leastsix months before the agency ceases to carry on business, notifythe Commission.

(3) Any person who becomes or ceases to be a director of aclearing and settlement agency shall, at least three months beforethe date of cessation of business, notify the Commission, in writing,of the change of address of the person.


Power ofCommissionto suspendbusiness ofclearing andsettlementagency

Notificationof changesand legalproceedingsformisconduct

(4) A clearing and settlement agency shall notify theCommission of any misconduct that has resulted in legal ordisciplinary proceedings being taken.

(5) A clearing and settlement agency shall furnish theCommission with any additional information, related to mattersprovided for in this section, as may be prescribed.

(6) A person who fails to give any notice or supply anyinformation, as provided for in this section, commits an offenceand shall be liable, on conviction, to a fine not exceeding threethousand penalty units for each day that the contravention continues.

95. (1) A clearing and settlement agency shall file with theCommission, within ninety days of the date of its financial year, anannual report which shall include—

(a) information on the corporate governance policy of theagency and any other information required by theCommission;


(c) audited consolidated financial statements, where theagency is a holding company or subsidiary.

(2) The financial statements to be included in an annual report,as specified in subsection (1), shall be audited in accordance withauditing and other standards as provided in the Accountants Act.

96. The Commission shall facilitate the coordination of clearingand settlement agencies with other regulated clearing and settlementfacilities for the effective settlement of securities transactions.

97. (1) A person may hold one or more securities accounts ina clearing and settlement agency and the securities accounts ofeach person shall be segregated from each other and from thesecurities accounts of the other account holders, and the interest,dividends and other benefits accruing to each securities accountshall be similarly segregated.

(2) A nominee shall hold securities for only one beneficial owneror for joint beneficial owners in respect of each securities account,unless otherwise agreed between a nominee and the clearing andsettlement agency.


Annualreports

Act No. 13of 2003

Coordinationof clearingandsettlementagencies

Assetsegregationin securitiesaccount

(3) A nominee shall, in such manner and within such period asmay be specified in the rules of a clearing and settlement agency,furnish to the clearing and settlement agency the name and otherparticulars of the beneficial owner and the balances of securities,in a named securities account, held in the name of the nominee.

(4) A nominee who contravenes subsection (2) or (3) shall beliable to such penalty as may be specified by the clearing andsettlement agency under its rules.

98. (1) A clearing and settlement agency shall establish aprocedure where it or an interested person may exercise controlover a participant’s account in the clearing and settlement agencyif—

(a) the interested person is, in relation to securities in theparticipant’s account, a beneficial owner, pledgee orjudgment creditor of the beneficial owner; or

(b) the securities in the participant’s account is subject to alien in favour of its issuer or to a restriction or constrainton its transfer.

(2) Subject to this Part, a clearing and settlement agency shallnot transfer, deliver or otherwise deal with securities in a blockedaccount without instructions, in writing, from the person whoexercises control over it.

99. (1) A clearing and settlement agency shall, on such datesas may be requested, in writing, produce and submit to the issueror the issuer’s duly appointed representative a list of holders ofrecord.

(2) Subject to section ninety-six, a securities exchange shallnot own or operate a clearing and settlement agency, except that asecurities exchange may have an interest in a clearing and settlementagency but its shareholding shall not exceed the prescribedpercentage of voting rights.

(3) Subject to subsection (2), this section shall not be construedas prohibiting the trading by a securities exchange, or the clearingand settlement agency of the securities exchange, of securitiesheld in the clearing and settlement agency relating to such issuerand in the respective securities accounts held by the account holdersfor the purpose of issuing notices, announcements, reports, paymentof interest or dividends or any other purpose.


Exercisingcontrol overparticipant’saccount

Holders ofrecord

(4) A clearing and settlement agency may, in accordance withits rules, issue to an account holder, upon request by the accountholder, in the prescribed form, a statement of the account holder’ssecurities account, specifying the amount and description ofsecurities in the account.

(5) The Tribunal may, on application by an interested party,order the rectification of a list of holders of record or any otherelectronic record kept by a clearing and settlement agency if it issatisfied that—

(a) an account holder did not consent to a transfer of depositedsecurities from the account holder’s securities account;

(b) a person who purports to be an account holder should nothave been registered in the clearing and settlementagency’s register as having title to the depositedsecurities, unless that person acquired the securities forconsideration, in good faith and without notice of otherinterests in the securities and obtained registration ofthe transfer in the records of the issuer or the clearingand settlement agency; or

(c) upon consideration of the application there is other causeto justify rectification.

100. (1) On the issue of securities, an issuer may deliver asecurities certificate, in the prescribed form, directly to a clearingand settlement agency certifying the clearing and settlement agencyas the registered owner of the securities if—

(a) the issuer has written authorisation signed by or on behalfof the beneficial owner; and

(b) the delivery of the securities certificate is evidenced by awritten confirmation signed by the clearing andsettlement agency and sent at once by the issuer to thebeneficial owner or the beneficial owner’s agent.

(2) An issuer may, on the issue of securities, instead ofdelivering a securities certificate, issue the securities to a clearingand settlement agency, as registered owner, by means of a recordentry if—

(a) the issuer of the securities has written authorisation signedby or on behalf of the beneficial owner of the securities;


Use ofclearing andsettlementagency asregisteredowner ofsecurities

(b) the issue of the securities is further evidenced by a writtenconfirmation executed by the clearing and settlementagency and sent at once by the issuer to the beneficialowner of the securities or the beneficial owner’s agent;and

(c) the issue of the securities is recorded at once in thesecurities register of the issuer and the records of theclearing and settlement agency.

(3) The requirement to obtain a written authorisation of thebeneficial owner, as specified in subsections (1) and (2), shall besatisfied if the beneficial owner acknowledges in an agreement ora document, entered into with a licensed person or clearing andlicensed settlement agency, that securities owned by the beneficialowner may be kept by means of a record entry with a clearing andsettlement agency, whether entered into before or after the issueof the securities, as specified in this section.

(4) A written confirmation, referred to in subsections (2) and(3), shall be, in the absence of evidence to the contrary, proof thatthe person named in the confirmation is the beneficial owner ofthe securities so described.

(5) A clearing and settlement agency shall not, in respect ofsecurities that are not fully paid for, make an entry in its records.

101. (1) A clearing and settlement agency shall, immediatelyafter receipt of a securities certificate from a participant, deliverthe securities certificate to the issuer and request the transfer ofthe securities evidenced by the securities certificate to the clearingand settlement agency.

(2) Where a clearing and settlement agency presents asecurities certificate to an issuer and requests a transfer to it ofthe securities evidenced by the securities certificate, the issuershall, if it has a duty to register the transfer, immediately enter thetransfer in its securities register and deliver to the clearing andsettlement agency a securities certificate representing the securitiesand showing the clearing and settlement agency as the registeredowner.

(3) Section ninety-nine shall apply, with the necessarymodifications, to a transfer of securities provided for in this section.


Transfer ofsecuritiesinto clearingandsettlementagency

102. (1) On receipt of instructions, in writing, from a participantor, if the participant’s account is blocked, from the person whoexercises control over it, a clearing and settlement agency shall inaccordance with the instructions, effect a transfer of securities orany interest therein from the participant to another participant bymaking an entry in its records.

(2) If —

(a) securities shown in the records of a clearing and settlementagency are—

(i) evidenced by a securities certificate identifyingthe clearing and settlement agency as theregistered owner; and

(ii) the securities certificate is in the custody of theclearing and settlement agency; or

(b) the clearing and settlement agency is the registered ownerof the securities by means of a record entry;

on receipt of instructions, in writing, from a participant or, if theparticipant’s account is blocked, from the person who exercisescontrol over it, a clearing and settlement agency shall in accordancewith the instructions, effect a transfer of securities or any interestin the securities from one beneficial owner to another beneficialowner by making an appropriate entry in its records in addition toany other method permitted by law, and such transfer shall havethe effect of transferring all rights, title and interest in the securitiesto the beneficial owner.

103. (1) A clearing and settlement agency shall, on receipt ofinstructions, in writing, from a participant or if the participant’saccount is blocked, from the person who exercises control over it,effect a transfer, in accordance with the instructions, by way ofpledge of securities from the participant to a pledgee, by making anentry in its records to block an account in the name of the participantin favour of the pledgee for the amount of the debt or other obligationor the number of securities pledged.

(2) A clearing and settlement agency shall, subject tosubsection (1), on receipt of instructions, in writing, from a pledgeein whose favour an account is blocked, stating that the pledgee isentitled to realise the securities in the blocked account, and inaccordance with the instructions, transfer the securities unless—


Transfer byrecord entry

Effectingtransfer ofpledge byrecord entry

(a) it knows that the pledgee is not entitled to realise thesecurities; or

(b) its procedures specify otherwise.

(3) A clearing and settlement agency shall not be liable forany loss resulting from compliance with the instructions of a pledgee,given in accordance with subsection (2), unless the clearing andsettlement agency knows, before the transfer, that the pledgee isnot entitled to the securities.

104. A clearing and settlement agency may, on receipt ofinstructions, in writing, from a participant and a beneficial owner ofsecurities, make an entry in its records, in accordance withinstructions, to block an account in the name of the participant infavour of the beneficial owner or a person who acts on the beneficialowner’s behalf.

105. (1) A clearing and settlement agency may refuse to openan account in respect of securities that are subject to a—

(a) lien in favour of its issuer; or(b) restriction or constraint on its transfer, whether statutory

or otherwise.

(2) A clearing and settlement agency may, with respect tosecurities, referred to in subsection (1), make an entry in its recordsto block an account in the name of a participant in favour of theclearing and settlement agency or an interested person.

106. (1) The Court may, on the application of a creditor whohas a judgment against a beneficial owner of securities, held by aclearing and settlement agency, order the clearing and settlementagency to make an entry in its records to block an account in thename of the beneficial owner or the beneficial owner’s agent infavour of the judgment creditor for the amount or number ofsecurities mentioned in the order.

(2) A clearing and settlement agency shall transfer securities,on receipt of an order of, or instructions in writing from, the Courtor an officer of the Court stating that a judgment creditor in whosefavour an account is blocked, in terms of subsection (1), is entitledto realize securities in the blocked account.


Blockingaccount byrecord entry

Refusal toopenaccount

Blockingaccount byCourt order

(3) The Tribunal may, on the application of a person claimingto be entitled to securities held for a beneficial owner in a clearingand settlement agency, order the clearing and settlement agency tomake an entry in its records to block the account in the name of thebeneficial owner or the owner’s agent in favour of the claimant forthe amount or number of securities mentioned in the order.

(4) A clearing and settlement agency shall not be liable forany loss resulting from compliance with an order or instructionsissued and received in accordance with this section.

107. (1) Transactions concluded on a securities exchange shallbe executed and completed when a clearing and settlement agencytransfers the securities transacted, within the period approved bythe Commission, from the securities account of the transferor tothat of the transferee in accordance with this Part and—

(a) where the consideration is monetary, by the Bank of Zambiasimultaneously transferring funds through debiting andcrediting the appropriate current accounts of participatingclearing banks in same-day value funds and inaccordance with an agreement between the banks andthe clearing and settlement agency; or

(b) where the consideration is not monetary, by thesimultaneous transfer of the consideration in accordancewith the rules of the clearing and settlement agency.

(2) For the purpose of effecting a settlement, the transfer ofsecurities by a clearing and settlement agency and the transfer offunds by the Bank of Zambia, or the transfer of the non-monetaryconsideration, in terms of subsection (1), shall be final andirrevocable.

(3) Every participant of a clearing and settlement agency, otherthan a participating clearing bank, shall maintain a bank accountwith a participating clearing bank for the purpose of settling itspayment obligations in accordance with the rules of the clearingand settlement agency.

(4) The transfer of ownership of, or an interest in, securitiesor a pledge of securities shall become effective and binding onlyupon the settlement of the securities transaction concerned.


Settlement ofsecurities

108. A capital markets participant who pledges, transfers orotherwise deals with securities held by a clearing and settlementagency, except through the facilities of the clearing and settlementagency, commits an offence and shall be liable, on conviction, to afine not exceeding five hundred thousand penalty units or toimprisonment for a term not exceeding five years, or to both.

109. (1) A clearing and settlement agency shall, within areasonable time, on the receipt of a demand, in writing, from aparticipant for whom securities are held, other than in securitiesheld in a blocked account, for withdrawal of the securities, subjectto any proceedings specified in this Part, obtain and deliver to theparticipant a securities certificate in the clearing and settlementagency’s name or a name designated by the clearing and settlementagency evidencing the securities.

(2) The issuer of securities shall, on receipt of instructions, inwriting, from a clearing and settlement agency that is the registeredowner of securities, immediately deliver the securities certificateto the clearing and settlement agency in accordance with itsinstructions.

110. (1) Where a clearing and settlement agency is theregistered owner of a class of securities of an issuer that proposesto close its securities register or fix a record date with respect ofthe class for the purpose of determining the security holders entitledto—

(a) receive notice of, or to vote at, a meeting of securityholders;

(b) receive payment of a dividend or interest;(c) to participate in a liquidation distribution;

the issuer shall give the clearing and settlement agency such noticeof its intention to close its securities register or fix a record date.

(2) A notice, referred to in subsection (1), shall request, fromthe clearing and settlement agency, a list of the names of theparticipants and beneficial owners for whom the clearing andsettlement agency and the participants hold securities of the class,mentioned in that subsection, made up as of the date on which itproposes to close its register or fix a record date.


Limitation onrights ofparticipants

Withdrawalof securities

Closure ofsecuritiesregister

(3) A clearing and settlement agency shall, on receipt of ademand, in writing, from an issuer for a list of the names ofparticipants and beneficial owners for whom it and the participantshold securities of a class issued by the issuer, provide the issuer,within ten days of the demand, with a list setting out the names andaddresses of, and the number or amount of securities of the classheld for, each participant and beneficial owner made up as of thedate specified in the demand.

(4) A clearing and settlement agency shall, on receipt of ademand from an issuer, in terms of subsection (3), send a notice ofthe demand to each participant.

(5) A participant that receives a notice, sent in terms ofsubsection (4), shall, within five days of receipt of a notice—

(a) furnish to the clearing and settlement agency a listcontaining the name and address of the beneficial ownersfor whom the participant holds the securities and thenumber or amount of securities of the class so held;and

(b) instruct the clearing and settlement agency to furnish thelist to the issuer.

(6) Where a participant who receives a notice, sent inaccordance with subsection (4), does not provide a clearing andsettlement agency or the issuer with a list of the beneficial ownersfor whom it holds securities, the participant shall, at its own expense,obtain from the issuer and send to each beneficial owner, who isnot included in the list and who has not instructed it otherwise inwriting, any dividend, interest or any document that the issuer wishesto send to its security holders.

(7) A clearing and settlement agency that receives lists ofparticipants and beneficial owners, in accordance with subsection(5), shall, before it furnishes the lists to the issuer, consolidate thelists into one list in a form that does not disclose any connectionbetween a beneficial owner and a participant, and the clearing andsettlement agency may charge the participants a reasonable feefor the consolidation.

(8) A clearing and settlement agency shall treat as confidentialany information it receives in accordance with subsection (5).


(9) A clearing and settlement agency shall, after receipt of ademand, in writing, from an issuer that has received a list ofparticipants and beneficial owners, in terms of subsection (3),provide the issuer, within three days of the demand, with a currentlist, made up as of a date subsequent to the demand, showing anychange in respect of the securities held for a participant since thedate the list was made up.

(10) An issuer is entitled to obtain, free of charge, from aclearing and settlement agency, in any one calendar year, four listsof participants and beneficial owners, in terms of subsection (3),with respect to each class of securities held by the clearing andsettlement agency and the issuer shall pay the clearing andsettlement agency a reasonable amount for—

(a) any additional costs attributable to a demand for a listmade after the date when the issuer closed its securitiesregister or fixed a record date; or

(b) any additional list.(11) An issuer is entitled to presume that a person named in a

list, obtained in accordance with this section, is the beneficial ownerof the securities of the issuer referred to in the list.

111. A beneficial owner of a security of an issuer and thebeneficial owner’s agent may, after submitting a request, in writing,to a clearing and settlement agency, during usual business hours,examine a list delivered to an issuer that relates to any securities ofthe issuer held by it and may make extracts from the list, withoutcharge and any other person may do so upon payment of areasonable fee.

112. (1) Subject to subsection (3), an incorrect entry made inthe records of a clearing and settlement agency, in connection witha transfer or pledge of securities has the same effect as a correctentry.

(2) Subject to subsection (3), a clearing and settlement agencyis liable to compensate a person who incurs a loss as a result of anincorrect entry made in its records.

(3) Where a clearing and settlement agency, makes anincorrect entry in its records, transferring a particular class ofsecurity to a participant’s account, the clearing and settlementagency may, to the extent that there are securities of that class inthe account, correct the entry, in whole or in part, without theparticipant’s consent.


Access toclearing andsettlementagencyrecords

Incorrectentry byclearing andsettlementagency

113. (1) Where a clearing and settlement agency is unable toeffect a pledge or transfer of securities on its records because ofan extraordinary event, the clearing and settlement agency shallnot be liable to compensate a person who incurs a loss as a resultof a delay in effecting the pledge or transfer to the extent that itproves that it took reasonable corrective action.

(2) For the purposes of this section, “extraordinary event”means a gain or loss which is infrequent and unusual in nature dueto a non-recurring event that is out of the clearing and settlementagency’s control.

114. (1) Subject to section eighty-six, a participant, who isinsolvent, shall cease to be a member of the clearing and settlementagency and, except in so far as the rules of the clearing andsettlement agency provide for the purpose of winding up the affairsof the participant and the protection of the interests of theparticipant’s clients and of the securities market, such participantshall not, while insolvent, conduct any business relating to theclearing and settlement agency.

(2) A person who, having ceased to be a participant, inaccordance with subsection (1), conducts any business relating toa clearing and settlement agency commits an offence and is liable,on conviction to a fine not exceeding two hundred thousand penaltyunits.

115. (1) Where a clearing and settlement agency becomesinsolvent, the liquidator, receiver and manager of the clearing andsettlement agency shall not have any right or privilege of accessto, or control or management of, any of the securities deposited inthat clearing and settlement agency.

(2) The securities deposited in a clearing and settlement agency,which becomes insolvent, shall be managed by a person appointedby the Commission and in such manner as the Commission maydirct for the purpose of winding up the affairs of the clearing andsettlement agency and protecting the assets of the account holders,interests of the securities market and the public.

(3) A clearing and settlement agency shall not, while insolvent,carry on or purport to carry on the business of a clearing andsettlement agency, except in so far as the rules made by theCommission provide for the winding up of the affairs of a clearingand settlement agency and the protection of the interests of itsparticipants and the securities market.


No liabilityinextraordinarycircumstances

Insolvency ofparticipant

Insolvencyof clearingandsettlementagency

(4) The chief executive officer or any officer or employee ofa clearing and settlement agency who, while the clearing andsettlement agency is insolvent and contrary to subsection (3), carrieson or permits to be carried on the business of the clearing andsettlement agency, commits an offence and is liable, on conviction,to a fine not exceeding one million penalty units or to imprisonmentfor a term not exceeding ten years, or to both.

116. Notwithstanding any law relating to insolvency, any assetof a participant, who is insolvent, pledged to a clearing and settlementagency as security for the settlement obligations of the participantor its client, in accordance with this Act, prior to the insolvency ofthe participant, may upon and after the commencement of theinsolvency be utilised by the clearing and settlement agency to theextent required for the discharge of those obligations.

117. Where a participant is insolvent, the winding up order ofthe affairs of the participant shall not affect any settlement thatbecomes final and irrevocable, in accordance with this Act, prior toservice of such order on the clearing and settlement agency.

118. Where a participant is wound up or placed underreceivership, the provisions of a written agreement to which theparticipant is a party and netting rules or procedures applicable tosuch participant, shall be binding upon the liquidator, receiver ormanager in respect of any settlement obligation which—

(a) has been incurred prior to the commencement ofinsolvency proceedings or prior to the issue of a windingup or receivership order;

(b) is to be discharged on or after the date of the winding upor receivership order; or

(c) was overdue on the date of the winding up or receivershiporder.

119. (1) Where an entry is alleged to have been incorrectlymade or retained in, or omitted or deleted from, the records of aclearing and settlement agency, other than in the circumstancespecified in this Part, the clearing and settlement agency or aninterested person may apply to the Tribunal for an order that therecords be rectified.

(2) The Tribunal may, on an application made in accordancewith subsection (1), make an order—


Utilisation ofcollateraluponinsolvency

Winding uporder

Nettingagreementsandprocedures

Rectificationof record byTribunal

(a) determining who is an interested person and the notice tobe given to such a person;

(b) dispensing with notice to any person;(c) determining the right of a party to the proceedings to have

that party’s name entered or retained in, or deleted oromitted from, the records of a clearing and settlementagency;

(d) directing that the records of a clearing and settlementagency be rectified;

(e) directing that a clearing and settlement agency make anentry in its records to block an account; or

(f) compensating any person.120. (1) An order of the Tribunal, made in accordance with

section one hundred and nineteen, shall be final and binding on allparties, including the Commission, except where an appeal to theCourt is allowed.

(2) An order made by the Tribunal shall not be stayed by reasononly of an appeal having been lodged with the Court, but the Courtshall, on sufficient grounds shown, stay the order made by theTribunal.

PART XCOLLECTIVE INVESTMENT SCHEMES AND VENTURE CAPITAL FUNDS

121. (1) The Commission may authorise the establishment ofcollective investment schemes.

(2) An application for authorisation to establish a collectiveinvestment scheme shall be made, to the Commission, by a dealeror investment advisor, in the prescribed manner and form, and shallbe accompanied by a prescribed fee.

(3) Subject to subsection (1), the Commission may authorisethe application, within ninety days of receipt of a complete applicationfor authorisation applied for, if after considering the application it issatisfied that—

(a) the manager of a collective investment scheme has therelevant competencies in relation to a scheme, and themanager, directors, external auditors, trustee or custodianas the case may be, are suitable to act as manager,trustee or custodian in respect of the scheme;


Order ofTribunal

Authorisationand regulationof schemes

(b) the manager, trustee or custodian of the scheme is a bodycorporate registered by the Commission;

(c) the collective investment scheme is such that the effectivecontrol of its affairs is vested in a manager andexercised independently of the trustee or custodian ofthe scheme; and

(d) trust deed or custodial arrangement is in compliance withthe Act and the regulations and rules made inaccordance with the Act.

(4) An authorisation, granted in accordance with subsection(1), may be subject to such terms and conditions as the Commissionconsiders necessary or desirable for the protection of investors.

(5) A person who enters or offers to enter into any agreementfor, or with a view to, acquiring, disposing of, or subscribing for,shares, units or other securities representing an interest in a collectiveinvestment scheme that is not authorised in accordance with thisPart, or establishes and operates a venture capital fund that is notauthorised in accordance with this Part, commits an offence andshall be liable, on conviction, to a fine not exceeding five hundredthousand penalty units, or to imprisonment for a term not exceedingfive years, or to both.

122. (1) A person who—

(a) issues or causes to be issued an advertisement or invitationto persons to become or offer to become participants ina collective investment scheme, that is not authorisedin accordance with this Part, or containing informationcalculated to lead directly or indirectly to persons’becoming or offering to become participants in such ascheme; or

(b) advises or procures a person to become or offer to becomea participant in such a scheme;

commits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units or to imprisonmentfor a term not exceeding five years, or to both.

(2) The Commission may issue a public warning and restrictunauthorised promotions.


Restrictionsonpromotions

123. (1) A person shall not carry on business, or purport to doso, as manager, trustee or custodian of a collective investmentscheme, unless that person that is authorised by the Commissionto operate in accordance with an authorisation granted inaccordance with this section and regulations made in accordancewith this Act.

(2) Subject to this Act, the Commission may, on an applicationmade in accordance with regulations made by the Commission, bystatutory instrument, grant or refuse to grant, in accordance withprescribed criteria and conditions, an authorisation to carry onbusiness as a manager, trustee or custodian of a collective investmentscheme.

(3) The Commission shall refuse to grant an authorisation tooperate as a manager, trustee or custodian of a collective investmentscheme, as prescribed, unless it is satisfied that the applicant is a fitand proper person to be so authorised.

(4) An individual who, or a company which, is not authorisedto operate as a manager, trustee or custodian of an collectiveinvestment scheme and—

(a) carries on business as a manager, trustee or custodian ofa collective investment scheme; or

(b) holds out as carrying on business as a manager, trustee orcustodian of a collective investment scheme;

commits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units or, in the case of anindividual, to imprisonment for a term not exceeding five years, orto both.

124. The property of a collective investment scheme shall beheld by a trustee or custodian on behalf of participants.

125. (1) The Commission may, on an application, made inaccordance with regulations made by the Commission, by statutoryinstrument, and after being provided with such information as theCommission may require, make an order declaring a foreigncollective investment scheme to be an authorised scheme for thepurposes of this Act, if —

(a) the scheme is managed in a country outside Zambia;(b) the scheme affords adequate protection to participants;


Authorisationof managers,trustees andcustodian

Trustee orcustodian toholdproperty

Authorisationof foreignschemes

(c) the scheme makes adequate provision for the matters dealtwith by regulations prescribed for purposes of this Part;

(d) the manager of the scheme has an agent in Zambia whois authorised, in accordance with this Part, and has thepower to act generally for the manager and acceptservice of notice and other documents on the manager’sbehalf; and

(e) the participants are entitled to have their interests redeemed,in accordance with the terms of the collective investmentscheme, at a price related to the net value of the propertyto which the interests relate and determined inaccordance with the scheme.

(2) An order declaring a foreign collective investment schemeto be an authorised collective investment scheme, for the purposesof this Act, may include such conditions as the Commissionconsiders appropriate.

126. The Commission may revoke the authorisation of acollective investment scheme, if it appears to the Commissionthat—

(a) the manager, trustee or custodian of the collectiveinvestment scheme has contravened a requirement ofthis Act and regulations and rules made in accordancewith this Act;

(b) the manager, trustee or custodian of the collectiveinvestment scheme has, in purported compliance withany requirement of this Act, knowingly or recklessly giventhe Commission information which is false or misleadingin a material particular;

(c) one or more of the requirements for granting theauthorisation are no longer satisfied; or

(d) it is undesirable in the interests of participants of thecollective investment scheme, or potential participantsof the scheme, or is otherwise not in the public interest,that the collective investment scheme should continueto be so authorised.

127. The Commission may, in revoking an authorisation of acollective investment scheme, as provided in section one hundredand twenty-six, give directions—

(a) requiring the manager of the collective investment schemeto cease the issue or redemption, or both, of interestsunder the collective investment scheme, on a datespecified in the direction, until such further date as isspecified in the direction; or


Revocationofauthorisation

DirectionsbyCommissiononrevocationofauthorisation

(b) requiring the manager, trustee and custodian of thecollective investment scheme to wind it up, by such dateas is specified in the direction or, if no date is specified,as soon as is practicable;

(c) requiring the manager, trustee or custodian of the collectiveinvestment scheme to take any other action that shallensure investor protection.

128. (1) The Commission shall issue rules, by statutoryinstrument, for or with regard to—

(a) the application process, establishment and operation ofcollective investment schemes;

(b) the constitution, management and operation of collectiveinvestment schemes;

(c) the appointment, removal, powers, duties, rights andliabilities of the manager, trustee and custodian ofcollective investment schemes;

(d) the administration of collective investment schemes andthe issue of directions to managers, trustees andcustodians with regard to their duties and manner ofoperating and administering collective investmentschemes;

(e) the rights and duties of the participants in any collectiveinvestment scheme;

(f) the procedures and conditions for the renewal, andrevocation of an authorisation granted under this Part;

(g) the conduct of business of a collective investment schemeand persons involved in the operation of a collectiveinvestment scheme;

(h) the manner in which the property of a collective investmentscheme is held;

(i) the closure and winding up of a collective investmentscheme, including an unauthorised collective investmentscheme;

(j) the appointment, removal, powers and duties of an auditorfor a collective investment scheme;

(k) the promotion, marketing and distribution of shares,securities or units representing the interest of participantsin a collective investment scheme;


Rules forcollectiveinvestmentschemes

(l) the expenses relating to a collective investment schemeand the means of meeting them;

(m) the issue and redemption of participants’ interests;(n) the valuation and pricing of participants’ interests;(o) the provision of management, custodian services or

trusteeships, or any other services for or in connectionwith a collective investment scheme;

(p) restricting or regulating the investment and borrowingpowers exercisable in relation to a collective investmentscheme;

(q) requiring the keeping of records with respect to transactionsand financial position of a collective investment schemeand for the inspection of such records;

(r) requiring the preparation of periodical reports with respectto a collective investment scheme and the submission ofsuch reports to the participants and the Commission;

(s) any fee, remuneration or reward payable or receivable forany services rendered to a collective investment scheme;

(t) changes to be made to a collective investment scheme;(u) the exemption from any of the requirements of this Part

or of regulations or rules made in accordance with thisAct, where the Commission considers it appropriate inthe circumstances of a particular case; and

(v) the provision by anybody corporate, trustee, custodian andoperator to service or provide other services, for or inconnection with a collective investment scheme;

(2) Without limiting the generality of subsection (1), rules issued,in accordance with that subsection, may vary according to thescheme being operated by a collective investment scheme, an open-ended investment company or any other kind of investmentcompany.

129. (1) The Commission may authorise the establishment ofa venture capital fund.

(2) An authorisation, granted in accordance with subsection(1), may be subject to such terms and conditions as the Commissionconsiders necessary or desirable for protection of investors.


Authorisationof venturecapital fund

(3) Subject to this Act, the Commission may, on an applicationmade in accordance with regulations made by the Minister, bystatutory instrument, grant or refuse to grant, in accordance withprescribed criteria and conditions, authorisation to operate a venturecapital fund.

(4) The Commission shall refuse to authorise the establishmentof a venture capital fund as prescribed, unless it is satisfied that theapplicant is a fit and proper person to be so authorised as prescribed.

(5) A person who is not authorised to establish and operate aventure capital fund in accordance with this Part, commits anoffence and shall be liable, on conviction, to a fine not exceedingfive hundred thousand penalty units, or to imprisonment for a termnot exceeding five years, or to both.

(6) A person aggrieved by a decision of the Commissionrefusing the establishment of a venture capital fund may, withinthirty days after the date of the decision, appeal to the Tribunal.

130. The Commission shall issue rules, by statutory instrument,for or with regard to—

(a) the application process, establishment and operation ofventure capital funds;

(b) the management and operation of venture capital funds;(c) investment conditions and restrictions in venture capital

funds;(d) general obligations and responsibilities of venture capital

funds;(e) maintenance of books and accounts by venture capital

funds; and(f) winding up of venture capital funds

PART XIMERGERS AND TAKE-OVERS

131. (1) Notwithstanding any other written law, every mergeror take-over of listed companies or companies whose securitiesare registered with the Commission shall be subject to this Part.

(2) An approval of a merger or take-over by the Commission inaccordance with this Part shall not relieve a listed company fromcomplying with any other applicable law.


Rules forventurecapital fund

Scope ofPartAct No. 24of 2010

(3) Nothing in this section shall apply to holding companiesacquiring shares solely for the purpose of investment.

132. (1) A person shall not make or pursue an offer in respectof a take-over or substantial acquisition of the securities of anylisted company or company whose securities are registered withthe Commission except in accordance with this Act and theconditions and procedures prescribed by regulations made inaccordance with this Act.

(2) For the purposes of this section, “ substantial acquisition ”means an acquisition of at least fifteen per cent of the issuedsecurities of the company concerned.

133. For the purposes of this Act, a merger may be createdthrough the acquisition of control or direction over the voting rightsof a company other than by way of a revocable proxy given for noconsideration for the purpose of one meeting of shareholders only.

134. (1) The Commission shall consider transactions relatingto the merger of a listed company or company whose securitiesare registered with the Commission, in accordance with subsection(2) and (4).

(2) A listed company or company whose securities areregistered with the Commission, that proposes a takeover or merger,or is being taken over by another company, shall apply to theCommission to approve the takeover or merger, in the prescribedmanner and form, and accompanied by a prescribed fee.

(3) The Commission shall consider and make a determinationon a proposed merger within sixty days of receipt of an applicationmade in accordance with subsection (2) and may extend the periodin which to consider and determine a proposed merger by a furtherperiod, not exceeding thirty working days.

(4) The Commission shall, in considering an application for aproposed takeover or merger, made in accordance with subsection(2) determine whether or not shareholders in a takeover or mergertransaction have been afforded fair treatment by requiring—

(a) fair, equitable and similar treatment of shareholders;(b) the disclosure of timely and adequate information to enable

shareholders to make an informed decision as to themerits of an offer; and

(c) that there is a fair and informed market in the shares ofcompanies affected by takeover and mergertransactions.


Take-overs orsubstant ia lacquisition

Creation ofmergers

Considerationofapplicationsfor proposedtake-oversand mergers

(5) The Commission may request the parties to the takeoveror merger to furnish the Commission with such additionalinformation as the Commission may require in order to make aninformed decision on the transaction.

(6) The Commission shall, after making a determination on aproposed merger, notify the parties of its decision to approve orreject an application for a takeover or merger, which may be subjectto conditions, in the prescribed manner and form.

(7) Where the Commission rejects an application made undersubsection (2), the Commission shall advise the parties not toproceed with the proposed takeover or merger for stated reasonsand shall inform the parties of their right of appeal to the Tribunal ifthey are not satisfied with the Commission’s determination.

135. (1) The Commission may investigate or appoint anauthorised person to investigate any merger or take-over and maydesignate one or more persons to assist the authorised person.

(2) The Commission may require any party to a proposedmerger or take-over to provide additional information in respect ofthe merger or takeover.

(3) A person may voluntarily file any document, affidavit,statement or other relevant information in respect of a merger ortake-over.

136. The Commission may, by statutory instrument make rulesto provide for the manner in which take-overs and mergersconcerning listed companies or companies whose securities areregistered by the Commission shall be effected.

PART XIIINSIDER TRADING

137. (1) An insider of a reporting issuer, other than a collectiveinvestment scheme, shall, in accordance with rules made by theCommission—

(a) file periodic reports disclosing the insiders direct or indirectbeneficial ownership of, or control over, securities ofthe issuer and the insider’s interest in, or right or obligationassociated with, a securities transaction; and

(b) make any other disclosures as may be prescribed.

(2) An insider shall, on request by the Commission, providethe Commission with information in the manner and form and withinthe time specified by the Commission.


Power toinvestigatemergers ortake-overs

Rules onmergers andtake-overs

Reports byinsiders

138. Subject to the other provisions of this Part insider dealingis prohibited.

139. (1) An insider shall not, directly or indirectly, counsel,procure or otherwise advise any person to buy, sell, or otherwisetransact in registered securities, if the person has price-sensitiveinformation until such information is publicly disclosed.

(2) A person shall not deal, counsel or procure another personto deal in securities of a company of which that person has anyknowledge that—

(a) is not publicly available; and(b) would, if it were publicly available, materially affect the

price of the securities.(3) This section shall not apply to a person who transacts in

registered securities who has knowledge or possession of price-sensitive information that has not been generally disclosed, wherethe person proves that—

(a) a director, senior officer, partner, employee or agent ofthe person that made or participated in making thedecision on the securities transaction had no actualknowledge of the price-sensitive information; and

(b) investment advice was not given relating to the securitiestransaction to a director, officer, partner or employee ofthe person who made or participated in making thedecision on the securities transaction and who had actualknowledge of the price-sensitive information.

(4) This section shall not apply where the person proves thatthe other party to the purchase, sale or trade of securities hadknowledge or possession of the price-sensitive information.

(5) Subsection (4) shall not apply to a director or officer of areporting issuer in connection with a distribution of securities of thereporting issuer to such director or officer unless the trade is madepursuant to a pre-existing option or other right of the director orofficer to subscribe for securities of the reporting issuer.

140. (1) A person who contravenes section one hundred andthirty-eight or one hundred and thirty-nine commits an offenceand shall be liable, on conviction, to a fine as specified in sectionone hundred and forty-one or to imprisonment for a period notexceeding five years, or to both.


Prohibitionof insiderdealing

Prohibitionon disclosingprice-sensitiveinformation

Offence ofinsidertrading

141. (1) Where the Tribunal finds, on application by theCommission, that a person has engaged in insider dealing, theTribunal may make an order requiring that person to pay to theCommission, an amount determined by the Tribunal.

(2) The maximum amount that may be ordered to be paid interms of subsection (1) shall be an amount equal to the amountdetermined by the Tribunal to be the amount of three times theprofit that may have been realised or loss avoided by the offenderdue to the offence, or in the case of a company, ten percent of theannual turnover of the company, whichever is more.

(3) The Tribunal shall, in making an order in terms of this sectionhave due regard to any administrative penalty already imposed inaccordance with this Act.

(4) An amount recovered in terms of this section shall be adebt due to the Commission, and shall be used by the Commissionfor investor protection and market development activities.

142. A transaction shall not be void or voidable, by reasononly that it was entered into by a person who had knowledge orpossession of price-sensitive information.

143. (1) Subject to this Part, a person shall not be prohibited,by reason of the person having knowledge or possession of price-sensitive information, from—

(a) entering into a securities transaction, in good faith, whilstexercising that person’s functions as a liquidator,receiver, receiver-manager or trustee in bankruptcy; or

(b) acquiring securities through any employee profit sharingplan or employee stock ownership plan established toprovide for the ownership of securities by employees,except that—

(i) the participation of the person in the plan isestablished prior to the time that the personacquired knowledge or possession of the price-sensitive information; and

(ii) the plan provides for the automatic acquisition ofsecurities by participants in the plan.

(2) A person shall not be considered to have engaged in insiderdealing if the person facilitates the completion or carrying out of atransaction that was agreed to before the person acquired theknowledge or possession of the price-sensitive information and thetransaction was completed on the same terms.


Disgorgement

Transactionnot void orvoidable

Exceptionsto insiderdealing

144. Where a person has committed an offence as specifiedin this Part, it shall not be a defence to the charge that the price-sensitive information came to the person’s knowledge or possessionwithout having been solicited by that person or that the personmade no effort to procure the acquisition of such information.

145. (1) For purposes of this Part, price-sensitive informationshall be considered to be disclosed following the public disseminationof the price-sensitive information.

(2) In this Part, a person who trades in securities at a timewhen that person has knowledge or possession of price-sensitiveinformation is presumed to have traded in the securities as a resultof the person’s knowledge or possession of the price-sensitiveinformation, unless proved to the contrary.

(3) In this Part, a company or unincorporated body isconsidered to have knowledge or possession of price-sensitiveinformation at and from the time such price-sensitive informationcomes into the knowledge or possession of any director, seniorofficer, partner or employee of such person.

PART XIIIAUDITING AND CORPORATE RESPONSIBILITIES OF LISTED COMPANIES

146. (1) Notwithstanding the Companies Act, a listed companyor company whose securities are registered with the Commissionshall file with the Commission, on a periodic or annual basis, asmay be prescribed by the Commission, its accounting records,financial statements and such other returns.

(2) The chief executive officer and the chief financial officeror any other officers or persons performing similar functions in alisted company or company whose securities are registered withthe Commission shall certify in each annual or periodic report filed,in accordance with subsection (1), that—

(a) the signing officer has reviewed the report;(b) based on the knowledge of the officer, the report does not

contain—(i) any untrue statement of a material fact, or(ii) omit to state a material fact, which would make

the statement, misleading in the light of thecircumstance under which such statement wasmade;


Defence ofnot solicitinginformationunavailable

Presumptions

Filing ofannual andperiodicreports withCommissionCap. 388

(c) based on the knowledge of such officer, the financialstatements and other financial information included inthe report fairly present, in all material respects, thefinancial condition and results of operations of the listedcompany or company whose securities are registeredwith the Commission as of, and for the periodspresented in the report;

(d) the signing officers—(i) are responsible for establishing and maintaining

internal controls;(ii) have designed such internal controls to ensure

that material information relating to thecompany and its consolidated subsidiaries ismade known to such officers by others withinthose entities particularly during the period inwhich the periodic reports are being prepared;

(iii) have evaluated the effectiveness of the listedcompany’s, or company’s whose securities areregistered with the Commission, internalcontrols, within ninety days prior to the report;and

(iv) have presented in the report their conclusionsabout the effectiveness of their internalcontrols based on their evaluation as of thatdate;

(e) the signing officers have disclosed to the audit committeeand to the auditors of the listed company or companywhose securities are registered with the Commission–

(i) all significant deficiencies in the design oroperation of internal controls which wouldadversely affect the company’s ability torecord, process, summarise and reportfinancial data and have identified for the listedcompany’s auditors any material weakness ininternal controls; and

(ii) any fraud, whether or not material, that involvesmanagement or other employees who havesignificant role in the listed company’s orcompany’s, whose securities are registeredwith the Commission, internal controls; and


(f) the signing officers have identified, in the report, whetheror not there were significant changes in internal controlsor other factors that could significantly affect internalcontrols subsequent to the date of their evaluation,including any corrective actions with regard to significantdeficiencies and material weaknesses.

147. (1) Notwithstanding the Companies Act, a listed companyor company whose securities are registered with the Commissionshall establish a system of internal controls over its financialreporting and security of its assets and the board of directors shallensure the integrity of the listed company’s systems.

(2) The board of directors of a listed company or companywhose securities are registered with the Commission, shall reporton the effectiveness of the company’s internal control system in itsannual report.

(3) In this section, “internal control” means policies, proceduresand practices put in place by the management or the board of alisted company or company whose securities are registered withthe Commission to ensure safety of assets, accuracy of financialrecords and reports, achievement of corporate objectives andcompliance with laws and regulations.

148. (1) Notwithstanding the Accountants Act, a listedcompany or company whose securities are registered with theCommission shall appoint an auditor who is a member in goodstanding of the Zambia Institute of Chartered Accountants, andsuch auditor shall not provide auditing services to the companyunless the auditor meets the minimum criteria specified by theCommission.

(2) An auditor shall audit the annual financial statements of alisted company or company whose securities are registered withthe Commission, in accordance with the prescribed standardsspecified in the Accountants Act, and as provided in this Part.

(3) Notwithstanding the Accountant’s Act, an auditor shall, inthe prescribed form and manner, provide a report to the Commission,on a licensed person’s failure to produce audited results within fourmonths of the end of a financial year, stating the reasons for suchdelay.

(4) A licensed person or auditor who fails to provide auditedresults or who fails to report a delay by a licensed person insubmitting audited results, as the case may be, and after dueinvestigation by the Commission, is liable to the penalty provided insection one hundred and fifty-nine.


System ofinternalcontrol ofcompaniesCap. 388

Commissionto approveauditors ofcompanies

Act No. 13of 2008

149. An auditor of a listed company or company whosesecurities are registered with the Commission shall, in the auditreport of the company, issue a statement as to the existence,adequacy and effectiveness or otherwise of the internal controlsystem of the company.

150. A listed company or company whose securities areregistered with the Commission shall disclose to the relevantsecurities exchange its quarterly earnings forecast in the mannerand form prescribed by the Commission in rules issued by statutoryinstrument.

151. (1) Where, on the commencement of this Act, a directorof a listed company or company whose securities are registeredwith the Commission has an interest in the securities of the listedcompany, or any other company being the listed company’ssubsidiary or holding company, or a subsidiary of the holding companyof the listed company or company whose securities are registeredwith the Commission, the director shall give notice, in writing, tothe company—

(a) of the subsistence of the director’s interests at that time;and

(b) of the number of shares of each class in, and the amountof debentures of each class of, the listed company orother such company in which the director’s interestsubsists.

(2) Subject to subsection (3), a director of a listed company orcompany whose securities are registered with the Commission shallhave interest in a transaction to which the company is a partywhere the director—

(a) is a party to, or shall or may derive a material financialbenefit from, the securities transaction;

(b) has a material financial interest in or with another party tothe securities transaction;

(c) is a director, officer or assignee of another party to, orperson who shall or may derive a material financialbenefit from, the securities transaction, not being a partyor person that is—

(i) the company‘s holding company, being a holdingcompany of which the company is a wholly-owned subsidiary;


Duty ofauditor toreport oninternalcontrols oflistedcompanies

Disclosure ofquarterlyearningsforecasts bylistedcompanies

Duty ofdirectors todiscloseinterests insecurities oflistedcompany

(ii) a wholly-owned subsidiary of the company; or(iii) a wholly-owned subsidiary of a holding company

of which the company is also a wholly-ownedsubsidiary; or

(d) is otherwise, directly or indirectly, materially interested inthe transaction.

(3) A director of a listed company or company whosesecurities are registered with the Commission shall not beconsidered to be interested in a securities transaction to which thelisted company is a party, if the transaction comprises only thegiving, by the company, of security to a third party and at the requestof that third party, which has no connection with the director andin respect of a debt or obligation of the company for which thedirector or another person has listed personally or assumedresponsibility, in the whole or in part, under a guarantee or indemnityor by deposit of a security.

(4) A director of a listed company or company whosesecurities are registered with the Commission shall give notice, inwriting, to the company of any of the following events:

(a) an event in consequence of whose occurrence the directorhas or ceases to have, an interest in securities of thecompany, or any other listed company being the listedcompany’s subsidiary or holding company, or a subsidiaryof the listed company’s holding company;

(b) the entering into by the director of a contract to sellsecurities;

(c) the assignment by the director of a right granted to thedirector by the listed company to subscribe for securitiesof the listed company;

(d) the grant to the director by another company, being thelisted company’s subsidiary or holding company or asubsidiary of the company’s holding company, of a rightto subscribe for securities of that other company, theexercise of such a right granted to the director and theassignment by the director of such a right so granted;and

(e) the notification to the listed company shall state the number,amount and class of securities involved.


(5) A director in a listed company or company whose securitiesare registered with the Commission shall disclose any interest insecurities held in a listed company before the expiry of a period offive days from the date on which the interest arises.

(6) For the purposes of subsections (1) and (4), an interest insecurities of—

(a) the spouse of a director of a listed company or companywhose securities are registered with the Commission,not being a director of the company; and

(b) the child of a director, not being a director of the listedcompany or company whose securities are registeredwith the Commission;

shall be treated as being the director’s interest.

152. (1) Every listed company or company whose securitiesare registered with the Commission shall establish and maintain aregister for the purposes of section one hundred and fifty-one ina manner and form approved by the Commission.

(2) Whenever a listed company or company whose securitiesare registered with the Commission receives notification from adirector in terms of section one hundred and fifty-one, the companyshall enter in the register, against the director’s name, the informationreceived and the date of the entry.

(3) A register, established in accordance with subsection (1),shall, during normal office hours, be open for inspection by thepublic, without payment of any charge.

153. (1) A listed company or company whose securities areregistered with the Commission shall, where a director disclosesan interest in securities held in the listed company, in accordancewith section one hundred and fifty-one, notify the Commissionand the listing exchange, where applicable, in writing, of that matter.

(2) A listed company or company whose securities areregistered with the Commission shall notify the Commission andlisting exchange, where applicable, before the expiration of fivedays from the date on which the company was notified by thedirector.

(3) A listing exchange may publish, to the public, in such manneras it may determine, the information notified in accordance withsubsection (1).


Register ofdirectors’interests insecurities

NotificationtoCommissionandsecuritiesexchange ofdirectors’interests

154. Where, on the commencement of this Act, a person is asubstantial shareholder in a listed company or company whosesecurities are registered with the Commission, the person shall givenotice, in writing, within twenty eight days of the commencementof this Act, to the company, stating the person’s name and addressand giving full particulars of the shares held by that person or theperson’s nominee by which the person is a substantial shareholder.

155. (1) A substantial shareholder shall give further notice, inwriting, to the listed company or company whose securities areregistered with the Commission, where the person—

(a) acquires further shares in that company; or(b) disposes of shares as a result of which the person ceases

to be a substantial shareholder of that company.(2) The disclosure notified, in accordance with subsection (1),

shall include the following information:(a) the total number of shares acquired or disposed of;(b) the prices paid or received for the acquired or disposed of

shares; and(c) the resultant total amount of shares held in the company

and the percentage of shares it represents.(3) Subject to subsection (1), a notification given by a substantial

shareholder, in accordance with this section, shall be made fivedays after the acquisition of the shares.

156. Where a listed company or company whose securitiesare registered with the Commission receives notification from asubstantial shareholder, in accordance with sections one hundredand fifty-four and one hundred and fifty-five, the company shallenter in the register, established and maintained, in accordance withsection one hundred and fifty-two, the information so notifiedand specify the date of the entry.

157. (1) Where a listed company or company whose securitiesare registered with the Commission is notified of any matter, by asubstantial shareholder, in accordance with section one hundredand fifty-four and one hundred and fifty-five, the company shallnotify the Commission and the listing exchange, where applicable,in writing, of the matter.

(2) A disclosure of an interest in securities made by a substantialshareholder of a listed company or company whose securities areregistered with the Commission shall be disclosed before the expiryof a period of five days from the date on which the company wasnotified by the substantial shareholder.


Duty ofsubstantialshareholdersto discloseshareholdings

Subsequentdisclosuresbysubstantialshareholders

Registrationofsubstantialshareholders’shareholdings

NotificationtoCommissionand listingexchange ofsubstantialshareholders

(3) The listing exchange may publish in such manner as itmay determine, the information notified as specified in subsection(1).

158. (1) Subject to subsection (3), all dividends or other sumswhich are—

(a) payable in respect of shares; and(b) unclaimed after having been declared or become payable;

shall be deposited in a separate special dividends payment bankaccount in the name of the issuer until claimed.

(2) The issuer and its agents, including the clearing andsettlement agency shall ensure that they maintain complete recordsdetailing the names of investors or shareholders and the dividendamounts payable.

(3) Notwithstanding subsection (1), if a dividend remainsunclaimed—

(a) a shareholder can claim, from the issuer, a dividenddeclared by the issuer, within fifteen years of the dateon which the dividend became payable; or

(b) the dividend that remains unclaimed after fifteen yearsof the date on which the dividend became payable shallbe transferred to the Commission.

(4) Where the dividend has been transferred to theCommission, in accordance with paragraph (b) of subsection (3),the recipient shall no longer be entitled to that dividend and it shallaccrue to the Commission and shall be deposited in an investorfund by the Commission for purposes of investor protection andmarket development activities.

(5) The Commission shall prescribe rules, by statutoryinstrument, on the prudential management of an investor fund intowhich unclaimed dividends are deposited in accordance withsubsection (4).

(6) No action to recover unclaimed dividends may be broughtagainst the issuer or against the Commission after the fifteenthyear from the date on which the dividend became payable, butwhere the Commission considers it desirable, to avoid hardship orinjustice, the Commission may make a payment to a claimant inrespect of unclaimed dividends.


Unclaimeddividends

159. A listed company or company whose securities areregistered with the Commission, a shareholder or an auditor whocontravenes this Part, shall be liable on conviction, to a penalty notexceeding one hundred thousand penalty units and to a furtherpenalty of ten thousand penalty units for each day the offencecontinues.

PART XIVINFORMATION, INVESTIGATIONS, INSPECTIONS AND CO-OPERATION

160. (1) The Commission may, by notice in writing, require acapital markets operator, or any other person or authority who theCommission considers has relevant information, to furnish it withsuch information as it may require for the performance of itsfunctions and exercise of its powers in terms of this Act, withinsuch reasonable time as it may specify.

(2) A capital markets operator, person or authority withinformation sought by the Commission shall furnish the informationto the Commission upon the request of any authorised employee ofthe Commission, failure to which the Commission shall seek a courtorder to compel the submission to it of such information.

(3) Subject to this Act, the Commission may, provideinformation furnished, in accordance with subsections (1) and (2),to other local or foreign regulatory authorities.

161. (1) The Commission may appoint such number ofinvestigators as it considers appropriate to carry out investigationsfor purposes of this Act.

(2) Where the Commission has reasonable cause to believe,either on its own motion or as a result of a complaint or otherinformation received, that—

(a) an offence has been committed as specified in this Act;(b) a capital markets operator may have engaged in

defalcation, fraud, misfeasance or other misconduct inconnection with a securities transaction or engaged inmarket misconduct; or

(c) the manner in which a capital markets operator hasengaged or is engaging in a securities transaction is notin the interest of the client or the public interest;

the Commission may, in writing, direct one or more investigators,to investigate any of the matters referred to in paragraphs (a), (b)or (c) and report the results of the investigation to the Commission.


Penalties forcontraventionof Part

Power ofCommissionto requestinformation

Investigations

(3) Where an investigator suspects a person to have possessionor control of any record or document which contains, or which islikely to contain, information relevant to an investigation, that personshall—

(a) produce to the investigator, within the time and at theplace the investigator directs in writing, any record,document or information specified by the investigatorwhich is, or may be, relevant to the investigation andwhich is in the possession or control of the person;

(b) if directed by the investigator, give the investigator anexplanation or further particulars in respect of anyrecord or document produced under paragraph (a);

(c) attend, before the investigator, at the time and place theinvestigator requires, in writing, and in the prescribedmanner, give a sworn statement relating to the mattersunder investigation; and

(d) give the investigator all assistance in connection with theinvestigation which the person is reasonably able to give,including responding to any written question raised bythe investigator.

(4) A sworn statement, given in accordance with subsection(3), may be relied upon in proceedings before the Tribunal or theCourt.

(5) A person commits an offence if, without reasonableexcuse, the person fails to—

(a) produce any record or document required to be producedas specified in paragraph (a) of subsection (3);

(b) give an explanation or further particulars required inparagraph (b) of subsection (3);

(c) attend before the investigator as required in paragraph(c) of subsection (3);

(d) answer a question put by the investigator or answers aquestion falsely or in a misleading manner or makes afalse statement; or

(e) comply with paragraph (d) of subsection (3).(6) A person who commits an offence specified in subsection

(5) shall be liable, on conviction, to a fine not exceeding five hundredthousand penalty units or to imprisonment for a term not exceedingfive years, or to both.


162. The Commission shall liaise and cooperate with otherinstitutions and authorities which conduct investigations of securitiesmarkets, capital markets operators, competition and consumerprotection or other relevant sectors or activity, so as to avoidduplication of information-gathering activities and applications.

163. (1) For the purpose of ascertaining whether a licensedperson or a person who held a licence granted in terms of this Act,is complying or had complied with this Act, and regulations or rules,made in accordance with this Act, or the terms and conditions of alicence, recognition or authorisation, the Commission may inspectany record or document relating to the business, including theinspection of the bank accounts and financial transactions of acapital markets operator.

(2) An inspector may—

(a) enter the premises of a capital markets operator;(b) require the capital markets operator or any other person

whom the authorised person believes is in possessionof, or has under that person’s control, any record ordocument, referred to in subsection (1), to produce it tothe authorised person;

(c) make inquiries of a capital markets operator, or any otherperson whom the authorised person has reasonable causeto believe has information relating to any record ordocument, referred to in subsection (1), concerning suchrecord, document, transaction or activity which wasundertaken in the course of, or which may affect, thebusiness conducted by the capital markets operator; and

(d) inspect and make copies of, or take extracts from, andwhere necessary, take possession of, such documents.

(4) The Commission may appoint any person to exercise thepowers of the Commission as specified in this section.

(5) For the purpose of an inspection, undertaken in accordancewith this section, a capital markets operator or other person, referredto in subsection (3), shall afford an inspector access to the recordsor documents as may be required for inspection and produce, tothe inspector, such records or documents as the inspector mayrequire.


Avoidance ofduplication ininvestigations

Inspections

(6) A person who, without reasonable excuse, fails to complywith a request made by an inspector, in accordance with this section,commits an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand penalty units, or to imprisonmentfor a term not exceeding five years, or to both.

164. A person who destroys, falsifies, conceals or disposesof, or causes or permits the destruction, falsification, concealmentor disposal of, any document, which the person knows or ought toknow is relevant to an inspection or investigation in terms of thisPart, commits an offence and shall be liable, on conviction, to afine not exceeding five hundred thousand penalty units or toimprisonment for a term not exceeding five years, or to both.

165. (1) Subject to other written laws, the Commission shallconsult and co-operate with any other regulatory authorityexercising power, in any other written law, over a financial institution,pensions or insurance industry entity, or other entity in the capitalmarkets, in order to minimize duplication of effort and maximizethe protection of investors.

(2) Where the Commission receives, from a regulatoryauthority outside Zambia, a request for assistance to investigate aperson specified by the regulatory authority as having contravenedor is contravening any legal or regulatory requirement which –

(a) the regulatory authority enforces or administers; and

(b) relate to securities transactions as are regulated by theregulatory authority;

the Commission may, where it is satisfied that there is need toprovide assistance, as specified in subsection (3), provide theassistance to investigate the matter by exercising any of its powersunder this Act.

(3) Subject to subsection (2), the Commission may provideassistance to investigate, as provided in subsection (2), if it is satisfiedthat—

(a) it is desirable or expedient that the assistance requestedshould be provided in the public interest or it is inaccordance with an agreement to provide assistanceon a reciprocal basis; or

(b) the assistance shall enable or assist the recipient of theassistance to perform its functions under any other law.


Destructionofdocuments

Co-operationwith otherregulators

(4) The Commission shall use its best efforts to protect theconfidentiality of non-public documents and information receivedpursuant to a request for assistance under this section.

(5) In furtherance of the purpose of this Act, the Commissionmay enter into a memorandum of understanding with any regulatoryauthority, specified in subsection (1), and with any regulatoryauthority of a foreign government, foreign securities regulator orother regulatory body which regulates securities transactions.

(6) The Commission may co-operate and participate in thework of a national, regional or international organisation dealingwith securities transactions, markets and the securities industry.

PART XVCIVIL LIABILITY

166. (1) Subject to this section, a purchaser of securitiesdistributed under a prospectus has a right of action for damagesfor any loss or damage sustained by reason of a misrepresentationin the prospectus, and the following shall be liable for any loss ordamage:

(a) the issuer or the securities holder, selling securities, onwhose behalf the distribution is made;

(b) a person who is a director of the issuer at the time offiling of the prospectus;

(c) a person who is authorised, or is named in, the prospectusas a director or as having agreed to become a director,either immediately or after a specified time;

(d) where the issuer is not a reporting issuer prior to thedistribution, any person who was a promoter of the issuerwithin the twenty-four month period immediatelypreceding the date of filing of the prospectus;

(e) a person whose consent has been obtained to include arepresentation made by the person with respect to amisrepresentation in a prospectus derived from, or basedon, reports, opinions, valuations or statements that havebeen made by such person; and

(f) any other person who signed a certificate in the prospectus,other than a person referred to in paragraphs (a) to (e).


Liability formisrepresen-tation inprospectus

167. Where an issuer or an individual or a company with actual,implied or apparent authority to act on behalf of an issuer releasesa document that contains a misrepresentation, an individual or acompany who acquires or disposes of the issuer’s securities, duringthe period between the time when the document was released andthe time when the misrepresentation contained in the documentwas publicly corrected, has, without regard to whether the personor company relied on the misrepresentation, a right of action fordamages against—

(a) the issuer of the securities;(b) each director of the issuer of the securities at the time

the document was released;(c) each officer of the issuer of the securities who authorised,

permitted or acquiesced in the release of the document;and

(d) each expert where—(i) the misrepresentation is also contained in a report,

statement or opinion made by the expert;(ii) the document includes, summarises or quotes from

the report, a statement or opinion of the expert;and

(iii) the document was released by a person orcompany, other than the expert, the expertconsented, in writing, to the use of the report,statement or opinion in the document.

168. (1) A person shall not, other than the issuer or the securityholder, who is selling the securities, or on whose behalf thedistribution is made, be liable in terms of sections one hundredand sixty-six and one hundred and sixty-seven who—

(a) having consented to become a director of the issuer,withdraws the consent before the filing of the prospectusand the prospectus;

(b) is filed without the person’s authority or consent;(c) when the prospectus was filed without the person’s

knowledge or consent, gave reasonable public notice ofthat fact after becoming aware of it;


Liability formisrepresenta-tion in otherdocuments

Defences

(d) after the filing of the prospectus and before the sale ofsecurities under it, became aware of a misrepresentationand withdrew the consent, and gave reasonable publicnotice of the withdrawal of the consent and the reasonsfor it; or

(e) for every misrepresentation, not purporting to be made onthe authority of an expert or an official document orstatement, had conducted such reasonable investigationas to provide reasonable grounds to believe and didbelieve, up to the time of the distribution of the securities,that the prospectus did not contain a misrepresentation.

(2) An individual or a company shall not be liable in an actionspecified in section one hundred and sixty-seven, if that personor company proves that the plaintiff acquired or disposed of theissuer’s security with knowledge that the document contained amisrepresentation.

(3) A person or company shall not be liable in an action specifiedin section one hundred and sixty-seven if that person or companyproves that—

(a) before the release of the document containing themisrepresentation, the individual or company conductedor caused to be conducted a reasonable investigation toascertain the accuracy of the document; and

(b) at the time of the release of the document, the individualor company had no reasonable grounds to believe thatthe document contained the misrepresentation.

(4) A person, shall not be liable as specified in sections onehundred and sixty-six and one hundred and sixty-seven if—

(a) as regards a misrepresentation made by an expert or basedon a report, opinion, valuation or statement made orprepared by an expert, the misrepresentation fairlyrepresented and was a correct and fair copy of, or extractfrom, the report, opinion, valuation or statement of theexpert, and that person had reasonable grounds tobelieve and did believe, up to the time of the filing of theprospectus or release of the document, that the expertmaking the statement or preparing the report, opinion orvaluation was competent to make it, and had given


consent to the inclusion of the representation in thedocument and had not withdrawn that consent beforedelivery of a copy of the prospectus for filing or therelease of the document, nor had the expert, to theperson’s knowledge, withdrawn that consent before thesale of securities under the prospectus or the releaseof the document;

(b) the person bringing the action had knowledge of themisrepresentation at the time of the purchase or sale ofthe securities; or

(c) as regards a misrepresentation purporting to be a statementmade by a public official or contained in what purportsto be a copy of, or extract from, a public document, themisrepresentation was a correct and fair representationof the statement or a copy of, or extract from, thedocument.

(5) An expert shall not be liable in an action as specified insections one hundred and sixty-six and one hundred and sixty-seven for any part of a prospectus or other document that includes,summarises or quotes from a report, statement or opinion made bythe expert, if the expert proves that the written consent previouslyprovided was withdrawn, in writing, before the prospectus wasfiled or the document was released.

(6) The liability of persons, referred to in sections one hundredand sixty-six and one hundred and sixty-seven, is joint and severalas between themselves with respect to the same cause of action.

(7) A person who is found liable to pay a sum in damages mayrecover a contribution, in whole or in part, from a person who isjointly and severally liable, in terms of this section, to make thesame payment in the same cause of action unless, in all thecircumstances of the case, the Court is satisfied that it would notbe just and equitable to do so.

169. The right of action for damages and the defences to anaction in terms of sections one hundred and sixty-six and onehundred and sixty-seven, are in addition to, and without derogationfrom, any other rights or defences the plaintiff or defendant mayhave in an action brought otherwise than under this Part.


Non-derogationfrom otherrights

170. (1) Subject to this section, a purchaser of securitiesdistributed under a prospectus has a right of action against theissuer or the underwriter, who has sold securities to the purchaserfor the rescission of the sale and repayment to the purchaser, ofthe price that has been paid in respect of the securities, if theprospectus contained a misrepresentation, except that if thepurchaser elects to exercise a right of action for rescission againstthe issuer or underwriter, the purchaser shall have no right of actionfor damages against the issuer or underwriter in terms of sectionone hundred and sixty-six.

(2) In an action brought in terms of section one hundred andsixty-six, the person bringing the action need not prove that theperson was in fact influenced by the misrepresentation, or that theperson relied on the misrepresentation in purchasing the securities.

(3) A person shall not be liable, as specified in subsection (1),if the purchaser who brought the action knew of themisrepresentation at the time of the purchase of the securities.

(4) This section applies to securities sold under a prospectusthat offers the securities for subscription in consideration of thetransfer or surrender of other securities, with or without the paymentof cash by, or to, the issuer, as though the issue price of the securitiesoffered for subscription were the fair value, as ascertained by theCourt, of the securities to be transferred or surrendered, includingthe amount of cash, if any, to be paid by the issuer.

171. (1) Notwithstanding any other provision to the contrary,the amount recoverable in terms of section one hundred and sixty-six or one hundred and sixty-seven shall not exceed the price atwhich the securities were sold.

(2) A dealer shall not be liable for underwriting, as provided insection one hundred and sixty-six, for more than the total publicoffering price represented by the portion of the distribution ofsecurities underwritten or sold by, or to, the dealer.

(3) An action shall not be brought, as specified in section onehundred and sixty-six, later than—

(a) two years after the date that the securities were sold tothe person bringing the action; or

(b) one hundred and eighty days after the date that thepurchaser bringing the action learnt of themisrepresentation.


Action forrescission formisrepresent-ation inprospectus

Limitationson action

(4) An action shall not be brought, as specified in section onehundred and sixty-six, later than—

(a) three years after the date on which the documentcontaining the misrepresentation was first released; and

(b) six months after the issuance of a news release disclosingthat leave had been granted to commence an action inaccordance with section one hundred and sixty-six, inrespect of the same misrepresentation.

172. (1) An action shall not be commenced, in accordancewith section one hundred and seventy without leave of the Court,granted on a motion with notice to each defendant.

(2) The Court shall grant leave where it is satisfied that—

(a) the action is being brought in good faith; and(b) there is a reasonable possibility that the action shall be

resolved at trial in favour of the plaintiff.

(3) The plaintiff and each defendant shall on an applicationmade in accordance with this section, serve and file one or moreaffidavits setting forth the material facts upon which each intendsto rely on.

(4) The maker of an affidavit, filed in accordance withsubsection (3), may be examined on it by the Court.

(5) A copy of the application for leave to proceed and anyaffidavits filed with the Court shall be sent to the Commission,immediately after being filed, by the plaintiff and each defendant.

173. An individual or a company that has been granted leaveto commence an action, in accordance with section one hundredand seventy-two, shall—

(a) promptly issue a news release, in a newspaper of widecirculation, disclosing that leave has been granted tocommence an action, in terms of section one hundredand seventy-two;

(b) send a written notice of the order for leave to proceed tothe Commission, within seven days, together with a copyof the news release; and

(c) send a copy of the documents filed into Court to theCommission.


Leave toproceed

Notice ofaction

174. An action, commenced in accordance with section onehundred and sixty-six and one hundred and sixty-seven shallnot be discontinued, abandoned or settled without the approval ofthe Court given on such terms as the Court considers appropriatein the case, including, terms as to costs, and in determining whetherto approve the settlement of the action, the Court shall consider,whether there are any other actions outstanding, in Zambia in termsof section one hundred and sixty-six and one hundred and sixty-seven, in respect of the same misrepresentation or failure to makea timely disclosure.

175. (1) The Commission may apply to the Court for leave tobring an action, in accordance with this Part, in the name, and onbehalf of, an issuer or securities holder, and the Court may grantleave on such terms as to security for costs that the Court considersappropriate, if the Court is satisfied that—

(a) the Commission has reasonable grounds for believing thata cause of action exists under this Part;

(b) the issuer or securities holder has failed or is unable tocommence an action; and

(c) the Commission has given sixty days written notice to theissuer or securities holder who has refused or failed tocommence an action;

(2) The Commission may apply to the Court for leave to appearor intervene in an action under this Part and the Court may grantleave on such terms as it considers appropriate.

(3) The Commission may publish a summary of the terms ofany settlement of an action commenced or intervened by it in aregular periodical published by it, or in a newspaper of generalcirculation in Zambia.

PART XVICOMPENSATION FUND

176. The Compensation Fund established by the Minister inthe repealed Act is continued and maintained for the purposes ofthis Act.


Restrictionondiscontinuation,etc. of action

Rights ofCommissionto bringrepresentativeaction

CompensationFund

177. The Compensation Fund shall be held and applied onsuch terms and conditions as the Minister may, by regulations,determine for the purposes of compensating persons who sufferpecuniary loss occasioned by any default of a licensed person orany employee of a licensed person, in the course of, or in connectionwith, any dealing in securities, being a loss in relation to any money,securities or other property which was entrusted to, or receivedby, the licensed person or an employee for, and on behalf of, thelicensed person.

178. (1) There is constituted the Compensation FundCommittee which shall be responsible for the management andadministration of the Compensation Fund and for the settlement ofclaims against the Fund.

(2) The members of the Compensation Fund Committee shallbe constituted of persons from the following organisations whichshall nominate one individual for appointment by the Commission:

(a) the Bankers’ Association of Zambia;(b) an association of capital markets players;(c) the Ministry responsible for finance;(d) the Law Association of Zambia;(e) the Zambia Chamber of Commerce and Industry; and(f) the Commission.

(3) The members of the Compensation Fund Committee shallelect the Chairperson and Vice chairperson, of the Committee,from amongst the members.

(4) The Committee may, subject to this Act, regulate its ownprocedure.

179. The Compensation Fund shall consist of—

(a) monies paid to or deposited into the Fund by dealers andinvestment adviser, as prescribed;

(b) monies recovered by, or on behalf of, the Fund in theexercise of any right of action conferred by this Part;

(c) interests and profits accruing from the investment made;and

(d) monies lawfully paid into the Fund.


Purpose ofFund

CompensationFundCommittee

Monies ofFund

180. There shall be paid out of the Compensation Fund and insuch order as the Compensation Fund Committee considers fairand just in the circumstances—

(a) the amount of claims for compensation, including costs,allowed by the Compensation Fund Committee;

(b) legal and other expenses incurred in investigating ordefending claims for compensation made in terms ofthis Act, or incurred in relation to the Fund, or in theexercise by the Committee of the rights, powers andauthorities vested in it by this Act;

(c) premiums payable in respect of contracts of insurance orindemnity entered into by the Compensation FundCommittee;

(d) the expenses incurred or involved in the administration ofthe Fund;

(e) the insolvency, bankruptcy or negligence costs resultingfrom an action of a licensed person;

(f) defalcation committed in terms of this Act; and(g) other moneys lawfully payable out of the Fund, as

prescribed by the Minister.

181. The Minister may make regulations prescribing all suchmatters and things as are necessary or expedient to be prescribedfor, or with respect to, the administration, management and financialmanagement and integrity of the Compensation Fund.

182. (1) The Minister may, by statutory instrument, prescribethe liability of the Fund, where a licensed person is in default oncontribution payments to the Fund.

(2) A licensed person shall, in addition to contributing towardsthe Compensation Fund, take out insurance against the liabilitiesthat may arise from the negligence or default of the licensed person,and employees of the licensed person.

183. Any disbursement from the Compensation Fund that ison account of a default by a licensed person shall be a debt due tothe Fund and recoverable, from the licensed person, at the suit ofthe Commission.


DisbursementsfromCompensationFund

Managementof Fund

Limitedliability ofFund andinsurance bylicensedpersons

Recovery ofdisbursementsfrom licencedefaulters

PART XVIICAPITAL MARKETS TRIBUNAL

184. (1) There is established the Capital Markets Tribunal.

(2) The Tribunal shall be a superior court of record and havean official seal which shall be judicially noticed.

(3) The Tribunal shall have jurisdiction to hear and determine —

(a) appeals from decisions of the Commission, or a personexercising the functions or powers of the Commission;

(b) proceedings relating to misconduct in the securities market;and

(c) such other matters as may be specified in, or prescribedin terms of this Act or any other written law.

185. (1) The Tribunal shall consist of the following part-timemembers who shall be appointed by the Minister:

(a) a Chairperson, who shall be a person eligible to be appointedas a Judge of the High Court;

(b) a Vice Chairperson, who shall be a person eligible to beappointed as a Judge of the High Court;

(c) three other members with knowledge and experience inlaw, securities, commerce, finance or accountancy.

(2) The members, referred to in paragraph (a) and (b), shallbe appointed in consultation with the Judicial Service Commission.

(3) The members of the Tribunal shall be appointed on suchterms and conditions as maybe specified in their letters ofappointment.

(4) A person shall not be appointed as a member of the Tribunalif the person —

(a) is an undischarged bankrupt;

(b) is of unsound mind; or

(c) has been convicted of an offence under any written lawand sentenced to imprisonment for a period exceedingsix months without the option of a fine.

(5) The office of a member of the Tribunal shall becomevacant—

(a) upon the member’s death;


Establishmentof Tribunalandjurisdiction

Members ofTribunal

(b) if a member is absent without reasonable excuse fromthree consecutive sittings of the Tribunal of which themember had notice;

(c) if the member is removed by the Minister on grounds ofinability to perform the functions of office whetherarising from infirmity of body or mind, incompetence ormisbehaviour;

(d) if the member is adjudged bankrupt;(e) the member becomes mentally or physically incapable of

performing the duties of a member;(f) if a member is removed on disciplinary grounds confirmed

by the relevant professional or regulatory body; or(g) if the member is convicted of an offence under any written

law and sentenced to imprisonment for a periodexceeding six months, without the option of a fine.

(6) If a vacancy occurs, in accordance with subsection (4),the Minister may appoint a new member in accordance withsubsection (1), but the member shall hold office only for the unexpiredperiod of the term.

(7) The validity of any proceedings, act or decision of theTribunal shall not be affected by any vacancy in the membership ofthe Tribunal or by any defect in the appointment of any member orby reason that any person not entitled to do so, took part in theproceedings.

186. A member of the Tribunal shall hold office for a period offour years from the date of appointment and may be re-appointedfor a further term of four years.

187. (1) The expenses and costs of the Tribunal shall be paidout of funds appropriated by Parliament for the performance of theTribunal’s functions under this Act.

(2) The members of the Tribunal shall be paid suchremuneration and allowances as the Minister may determine.

188. (1) There shall be a Registrar of the Tribunal who shallbe appointed by the Minister in consultation with the Judicial ServiceCommission.

(2) The Registrar shall be a person with not less than ten yearslegal experience.

(3) The Registrar of the Tribunal shall be the chiefadministrative officer of the Tribunal and shall be responsible, underthe general supervision of the Chairperson, for the effective andefficient administration of the affairs of the Tribunal, and maydischarge such duties as prescribed by the rules of the Tribunal.


Tenure ofoffice ofmembers ofTribunal

Funding andallowancesof membersof Tribunal

Appointmentandfunctions ofRegistrar ofTribunal

(4) The terms and conditions of service of the Registrar of theTribunal shall be as determined by the Tribunal.

189. (1) There shall be such officers and employees of theTribunal, as may be necessary to carry out the functions of theTribunal, appointed by the Tribunal.

(2) The terms and conditions of service of staff of the Tribunalshall be as determined by the Tribunal.

190. (1) The tribunal shall be constituted and exercise thefollowing powers and functions as specified in this section:

(a) any matter, by the Chairperson or Vice-Chairperson sittingwith at least two other members or by the fullmembership;

(b) any matter of practice or procedure, by the Chairpersonor any member of the Tribunal who is assigned for thatpurpose by the Chairperson; or

(c) any matter of practice or procedure, which is uncontested,by any member of the Tribunal assigned generally orspecifically for that purpose by the Chairperson.

(2) The Tribunal may sit in more than one division at suchplaces and times, in any part of Zambia, as the Chairperson or, inthe absence of the Chairperson, the Vice Chairperson maydetermine.

(3) The Chairperson, when present, shall preside, and, in theabsence of the Chairperson, the Vice-Chairperson shall preside.

(4) The Tribunal shall, when hearing any matter, be dulyconstituted if it consists of three members which members shallinclude the Chairperson or the Vice-Chairperson.

(5) The Chief Justice may, by statutory instrument, make rulesrelating to the following:

(a) prescribing the forms to be used in proceedings beforethe Tribunal;

(b) issuing of notices for the attendance at, and hearings of,the Tribunal, including time periods;

(c) procedure for the attendance and examination of witnesses,the production and inspection of documents, theenforcement of the Tribunal orders, the entry on andinspection of property and other matters necessary orproper for the due exercise of the Tribunal’s mandate;


Staff ofTribunal

Exercise ofpowers ofTribunal andprocedure

(d) written submissions to be filed in addition to, or in theplace of, an oral hearing;

(e) the carrying on of the functions of the Tribunal and thepractice and procedure on appeals and disciplinaryhearings; and

(f) awarding of costs of proceedings before the Tribunal.

(6) A summons for the attendance of a witness or for theproduction of any book, document, record or other thing shall besigned by the Registrar of the Tribunal and served in the samemanner as a subpoena for the attendance of a witness at a civiltrial in a Court.

(7) The decision of the Tribunal shall be that of the majority ofthe members considering the matter.

(8) The decision of the Tribunal in any proceedings shall bedelivered by the presiding member.

191. (1) Where—

(a) an application of a person for a licence, made inaccordance with this Act, is refused or denied;

(b) a licence, registration, authorisation or recognition, grantedin accordance with this Act, is subject to conditions whichthe applicant is dissatisfied with;

(c) conditions are attached to, or varied for, a license,registration, authorisation or recognition, and the licensedperson, self-regulatory organisation or other person isdissatisfied with the conditions or variation;

(d) a licence, registration, authorisation or recognition, grantedin accordance with this Act, is revoked or cancelled inaccordance with this Act;

(e) the Commission declines to register any securities inaccordance with this Act; or

(f) the Commission declines to authorise the establishment ofa collective investment scheme in accordance with thisAct;

the applicant, person, licensed person or self-regulatory organisationmay appeal to the Tribunal, within thirty days of receipt of thedecision.


Appeals toTribunal

(2) Notwithstanding subsection (1), the Tribunal shall hear anappeal on any matter specified in this Act, being a matter that anaggrieved person, licensed person, scheme or organisation is entitledto appeal on in accordance with this Act.

192. (1) An appeal, to the Tribunal shall be instituted by filingwith the Registrar of the Tribunal, a notice of appeal, accompaniedwith the prescribed fee, and by serving a copy of the notice on theCommission, within twenty-eight days of the notification to, or theservice on, the respondent, or within such other time as may berequired by the rules prescribed by the Chief Justice.

(2) Notwithstanding subsection (1), an appeal may be institutedout of time if the Tribunal is satisfied that there was a reasonablecause for not appealing within the time prescribed and that theappeal was filed thereafter without unreasonable delay.

(3) A notice of appeal shall specify the grounds of appeal andbe in such form and manner as may be prescribed by rules issuedby the Chief Justice.

(4) If, on the hearing of an appeal, the appellant desires tobring in any ground of appeal, which was not specified in the noticeof appeal, and the omission of that ground from the notice was, inthe opinion of the Tribunal, not wilful or unreasonable, the Tribunalshall not be precluded from allowing the appellant to bring in thatground or take such ground into consideration.

(5) The Commission shall, within seven days, after receiving anotice of appeal, forward to the Tribunal copies of all documentsrelevant to the decision appealed from.

193. (1) An appeal shall be heard in public, unless the Tribunal,on the application of the applicant, otherwise directs.

(2) The Tribunal may dispose of an appeal by—

(a) confirming, varying or setting aside an original order, ordecision and, where the original order or decision is setaside, by substituting the original order or decision asthe Tribunal considers appropriate;

(b) remitting the matter in question to the Commission withsuch directions as it considers appropriate; or

(c) making any other order which the Tribunal considersappropriate.


Notice ofappeal

HearingsbeforeTribunal

(3) Where the Tribunal varies or substitutes any order ordecision as provided in paragraph (a) of subsection (2), the orderor decision as varied or substituted shall be the decision of theCommission on appeal.

(4) The Tribunal shall deliver a judgment within sixty days ofthe conclusion of the hearing of a matter and the judgment ordecision of the Tribunal shall be reasoned.

(5) The standard of proof required to determine any questionor issue before the Tribunal shall be the standard of proof applicableto civil proceedings in the Court of law.

(6) A person aggrieved with the decision of the Tribunal may,within thirty days of receipt of the decision, appeal to the Court ofAppeal.

(7) The Registrar of the Tribunal shall cause every award,decision or judgement of the Tribunal to be communicated to theparties concerned.

(8) The Tribunal shall cause to be kept a record of itsproceedings.

194. (1) The Commission may institute proceedings before theTribunal, if it appears to the Commission that any licensed personhas committed an act of misconduct in the capital markets, asprescribed.

(2) The Commission shall institute proceedings by giving theTribunal a notice, in writing, as prescribed, which notice shall containa statement specifying the grounds being relied on and the mattersspecified in subsection (3).

(3) Without limiting the generality of subsection (2), the Tribunalshall determine—

(a) whether any act of misconduct in the capital markets hasbeen committed;

(b) the amount of profit gained or loss avoided as a result ofthe act of misconduct in the capital markets.

(4) The Tribunal may, where an act of misconduct in the capitalmarkets is proven, order that a person identified as having engagedin the act of misconduct be subject to the following order—

(a) payment of an administrative fine, payable to theCommission, as may be prescribed;


Marketmisconductproceedings

(b) censure, including the publication of a notice in a newspaperof general circulation;

(c) compensation or restitution to any person, on such termsas the Tribunal may direct;

(d) account for, in such form and on such terms as the Tribunalmay direct, such amounts as the Tribunal determines tobe profits arising from the act of misconduct or any otherform of unjust enrichment determined by the Tribunal;

(e) cease and desist from such activity as the Tribunal maydetermine;

(f) do any act or thing;(g) be prohibited from being, or becoming, a senior officer or

director of a reporting issuer or participant; or(h) pay a specified amount, being all or part of the costs of

the proceedings, including those of any other party tothe proceedings.

(5) Notwithstanding subsection (1), the Commission may referany matter to the Director of Public Prosecutions, and the appropriateinvestigative wing, if it appears to the Commission that the act ofmisconduct in the market or industry may constitute a criminaloffence.

195. (1) An appellant, respondent or the Commission, ifdissatisfied with an order or decision of the Tribunal, as beingerroneous in point of law or fact or both law and fact may, withintwenty-one days after the delivery of the order or decision or withinsuch other time as may be prescribed by rules issued by the ChiefJustice, appeal against such order or decision, with leave of theCourt of Appeal, except that the appellant may appeal to the SupremeCourt against the refusal of the leave to appeal.

(2) An appeal shall be instituted by filing with the Registrar anotice, in writing, in the prescribed form, and serving a copy of thenotice on the respondent.

(3) A notice of appeal shall set forth the facts and thedetermination of the Tribunal and the appellant shall transmit thecase to the Court of Appeal within twenty-eight days after receivingthe same.

(4) The appellant shall, at or before the time of transmission ofthe case to the Court of Appeal serve a copy of the case to theother party.


Appeal toCourt ofAppeal

(5) The Court of Appeal shall hear and determine the caseand shall reverse, affirm, or amend the order or decision beingappealed against or refer the matter back to the Tribunal with anopinion of the Court of Appeal or make such other order in relationto the case as the Court of Appeal may consider appropriate in thematter.

PART XVIIIOFFENCES ON IMPROPER TRADING PRACTICES

196. In this Part, where a section provides that a person isliable to payment of penalty units for committing an offence, theCourt may impose, taking into account the size of the transactionor severity of the offence, in substitution of the penalty units, apenalty of ten percent of the annual turn-over of the business ofthe capital markets operator, if the turn-over is higher than thepenalty units provided.

197. A person who, directly or indirectly, in connection withany securities transaction—

(a) employs any device, scheme or artifice to defraud anotherperson; or

(b) engages in any act, practice or course of business, whichoperates as a fraud or deception, or is likely to operateas a fraud or deception, of another person;

commits an offence and shall be liable, on conviction, to a fine notexceeding one million penalty units or to imprisonment for a termnot exceeding ten years, or to both.

198. (1) A person shall not create or cause to be created, ordo anything with the intention of creating—

(a) a false or misleading appearance of the volume of tradingin securities on any securities exchange; or

(b) a false or misleading appearance of the market for, or theprice of, securities.

(2) A person shall not, in a securities transaction that does notinvolve a change in the beneficial ownership of securities or by anyfictitious transaction or device, maintain, inflate, depress or causefluctuations in the market price of securities.

(3) A securities transaction shall not, for the purposes ofsubsection (2), involve a change in the beneficial ownership if aperson who had an interest in the securities, before the securitiestransaction, or a person associated with the person in relation tothe securities, holds an interest in the securities after the securitiestransaction.


Penalty insubstitutionof penaltyunits

Fraudulenttransactions

False tradingandmanipulationof themarket

(4) A person who contravenes this section commits an offenceand shall be liable, on conviction, to a fine not exceeding one millionpenalty units or to imprisonment for a term not exceeding ten years,or to both.

199. A person who induces or attempts to induce anotherperson to deal in securities—

(a) by making or publishing any statement, promise or forecastthat the person knows to be misleading, false ordeceptive;

(b) by any dishonest concealment of material facts; or(c) by recklessly or dishonestly making or publishing any

statement, promise or forecast that is false or misleading;

commits an offence and shall be liable, on conviction, to a fine notexceeding one million penalty units or to imprisonment for a termnot exceeding ten years, or to both.

200. (1) A person shall not make a statement or give informationto a securities exchange, self-regulatory organisation or a clearingand settlement agency, being a statement or information that theperson is required to give in terms of this Act, where the personknows or ought reasonably to have known that the statement orinformation is false or misleading.

(2) A person shall not omit to state any matter, in or inconnection with any application to a securities exchange, self-regulatory organisation or a clearing and settlement agency, beinga matter required by this Act or regulations or rules made inaccordance with this Act, where the person knows or oughtreasonably to have known that, because of the omission, theapplication is misleading in a material respect.

(3) A person who contravenes this section commits an offenceand shall be liable, on conviction, to a fine not exceeding one millionpenalty units or to imprisonment for a term not exceeding ten years,or to both.

201. A person who, directly or indirectly, for the purpose ofinducing a securities transaction, makes with respect to thesecurities, or with respect to the operations or the past or futureperformance of the listed company—


Use ofdeceptivestatements,etc. asinducements

Falsestatements tosecuritiesexchange, etc.

False ormisleadingstatementson sale ofsecurities

(a) any statement which is, at the time and in light of thecircumstances in which it is made, false or misleadingwith respect to any material fact and which the personknows or has reasonable grounds to believe to be falseor misleading; or

(b) any statement which is, by reason of the omission of amaterial fact, rendered false or misleading and whichthe person knows or has reasonable grounds to believeis rendered false or misleading by reason of omission ofthat fact;

commits offence and shall be liable, on conviction, to a fine notexceeding one million penalty units or to imprisonment for a termnot exceeding ten years, or to both.

202. (1) A person who is convicted of an offence as specifiedin this Part shall, in addition to any criminal liability for the offence,be liable, at the suit of any person who has sustained pecuniaryloss as a result of having purchased or sold securities at a priceaffected by the act or transaction which comprises or is the subjectof the offence, to an action for damages in respect of the lossincurred.

(2) Nothing in this section limits or diminishes any civil liabilitywhich any person may incur in terms of any other law.

203. A person who refuses or fails, without reasonable excuse,to furnish information or a document that the person is required tofurnish in terms of this Act or any regulations or rules, made inaccordance with this Act, commits an offence and shall be liable,on conviction, to a fine not exceeding one million penalty units, orimprisonment for a term not exceeding ten years, or to both.

204. A person who hinders or obstructs the Commission, theChief Executive Officer or any person authorised by the Commissionor Chief Executive Officer, in the performance of their functionsas provided in this Act or any regulations or rules, made inaccordance with this Act, commits an offence and shall be liable,on conviction, to a fine not exceeding five hundred thousand penaltyunits, or imprisonment for a term not exceeding five years, or toboth.


Damages forlosssustained

Failure tofurnishinformation

ObstructingCommission,ChiefExecutiveOfficer, etc.

PART XIXMISCELLANEOUS PROVISIONS

205. A person who, for the purposes of obtaining a licence, inaccordance with this Act, whether for oneself or for any otherperson, makes any representation, whether in writing, orally orotherwise, which that person knows to be false or misleading as toa material particular, commits an offence and shall be liable, onconviction, to a fine not exceeding one million penalty units or toimprisonment for a period not exceeding ten year, or to both.

206. (1) A licensed person shall, after the approval of theCommission, designate a compliance officer in accordance withprescribed guidelines and rules.

(2) A compliance officer shall —

(a) monitor and report, to the Commission, compliance of alicensed person in respect of the obligations specified inthis Act and any codes, policies, procedures or systemsprescribed in this Act or regulations or rules made inaccordance with this Act;

(b) advise and assist the licensed or authorised person incomplying with its obligations in accordance with thisAct;

(c) review policies and procedures for management ofconflicts of interest and assess the risk of non-compliance of such policies and procedures; and

(d) submit reports to the Commission on compliance bylicensed persons.

207. (1) The regulatory powers conferred on the Commissionover a licensed person, in this Act, may only be exercised if itappears to the Commission that the person is not a fit and properperson to be a licensed person and—

(a) the person has contravened or failed to comply with aprovision of this Act or regulations or rules made inaccordance with this Act, is in purported non-compliancewith any such provision or has furnished the Commissionwith information that is false, inaccurate or misleading;or

(b) the exercise of the power is otherwise necessary for theprotection of current or future investors.


Fraudulentapplications

Designationofcomplianceofficer oflicensedperson

Commission’spower overlicensedpersons

(2) The Commission may recommend, to a securities exchange,clearing and settlement agency, dealer, investment advisor, or self-regulatory organisation, the removal from office of a person insenior management who is not compliant with subsection (1).

208. (1) The Capital Markets Operators shall establish anassociation of Capital Markets Operators for the purpose ofestablishing and enforcing a code of conduct and promoting thedevelopment of Capital Markets.

(2) The Commission shall not license a Capital MarketOperator that is not a member of the association referred to insubsection (1).

209. (1) A board of a securities exchange or the Commission,if the board fails to act, may suspend, expel or otherwise disciplineany member of the securities exchange, or deny any member accessto the securities exchange, in accordance with the exchange rules.

(2) Any suspension, expulsion, disciplinary or access denialprocedures, prescribed by an exchange rules, shall provide forwritten notice to the Commission and to the member who issuspended, expelled, disciplined or denied access, which shallinclude the reasons for the action or decision taken, within thirtydays of the taking of such action or decision.

(3) A board of a securities exchange or the Commission shallmake public its findings and the reasons for any action taken in anyproceeding in terms of this section.

(4) The Commission may, by notice in writing, for a period notexceeding six months, suspend, a director, manager or officerconcerned in the management of a capital market operator whofails to take reasonable steps to secure compliance by the capitalmarket operator with the requirements of this Act or theRegulations.

(5) The Commission may, before the expiry of the period ofsuspension referred to in subsection (4), apply to the Tribunal foran order extending the suspension for such period as the Tribunalconsiders necessary, or removing the director, manager or officerfrom office.

(6) Despite subsection (5), the Commission may recommendto a capital market operator for the removal from office of a director,manager or officer who fails to take reasonable steps to secure thecompliance of the capital market operator with this Act andRegulations without suspending the director, manager or officer.

(7) Where a director, manager or officer is suspended orremoved from office under this section, the director, manager orofficer shall not perform any duty pertaining to the office duringthe period of suspension, or after removal from office.


Associationof CapitalMarketsOperators

Disciplinaryactions

(8) A person who contravenes subsection (6) commits an officeand is liable, upon conviction, to a fine not exceeding five hundredthousand penalty units or to imprisonment for a term not exceedingfive years, or to both.

210. (1) The Commission may, in accordance with suchstandards and procedures as it may consider appropriate, reviewany decision made by a board of a securities exchange or a clearingand settlement agency in which a person is suspended, expelled orotherwise disciplined or denied access to the securities exchange.

(2) The Commission may, by order, affirm, modify, set aside orremand any decision it reviews, pursuant to subsection (1), after adetermination, on the record, whether the action of the board wasin accordance with this Act and its exchange rules.

(3) Any order of the Commission, made in terms of subsection(2), shall govern the securities exchange in its further treatment ofthe matter.

(4) The Commission may order a stay of any action taken,pursuant to subsection (1), pending review of the action.

211. (1) The Commission may publish, in the GovernmentGazette and a daily newspaper of general circulation in Zambia,and in any other manner it considers appropriate, such codes andguidelines as it considers necessary for providing guidance—

(a) for the furtherance of any of its regulatory objectives; and(b) in relation to any matter relating to the functions of the

Commission or operation, compliance and enforcementof this Act or rules or regulations made in accordancewith this Act.

(2) A code, guideline, directive or guidance notes issued by theCommission, in accordance with this Act, shall be complied with,failure to which the Commission may impose an administrativepenalty as provided in this Part.

212. The Commission may issue such directives, guidancenotes, bulletins or other regulatory statements as the Commissionmay consider necessary or desirable for the administration of thisAct, or rules and regulations made in accordance with this Act.

213. (1) Subject to this section, any person may, on request,review or copy any document lodged with the Commission in termsof this Act or any regulations or rules made in accordance with thisAct.

(2) The Commission may, by rules, specify procedures formaking requests for access, as provided in subsection (1), and theterms and fees to be paid for purposes of such access.


Codes andguidelines

Guidancenotes, etc.

Access todocuments

Review byCommission

(3) The Commission may refuse to authorise a document tobe reviewed or copied, in whole or part, where it is satisfied that—

(a) information in the document is confidential to the personlodging the document and has a real commercial valueto the person that would be seriously and unreasonablyprejudiced if the information were to be made generallyavailable; or

(b) information in the document is personal information abouta person and it is in the public interest that the informationshould not be generally available.

214. (1) The Commission may make rules in respect of thepublication, form and content of securities advertisements.

(2) Rules made in accordance with subsection (1) may—(a) prohibit the publication of advertisements of any description,

whether by reference to their contents, to the personsby whom they are published or otherwise;

(b) make provision as to the matters which should or shouldnot be included in such advertisements;

(c) provide for any exemptions from any requirement imposedby this Act; and

(d) provide for offences and penalties for the breach of anyrequirement of the rules.

(3) Where, it appears to the Commission that a securitiesadvertisement—

(a) does not comply with any requirement imposed in therules made in terms of this section; or

(b) is false or misleading;the Commission shall give such directives to the person who haspublished or caused to be published the securities advertisement asit considers appropriate in the circumstances.

(4) A directive given, in terms of subsection (1), may require—(a) a person to modify, in whole or in part, the advertisement;

or(b) the publication of the securities advertisement to cease.

(5) Nothing in this section shall prejudice any remedy that anaggrieved person may have against a person who published orcaused to be published an advertisement contrary to therequirements of the rules made in accordance with this section.


Control ofadvertisements

(6) A person who contravenes this section commits an offenceand shall be liable, on conviction, to a fine not exceeding one millionpenalty units or imprisonment for a term not exceeding ten years,or to both.

215. (1) Where this Act or any rules and regulations made inaccordance with this Act, provides that a person commits an offencewhere the person does a particular act, the offence is deemed tohave been committed even where the act is done partly outsideZambia.

(2) Where this Act or any regulations and rules, made inaccordance with this Act, provides that a person commits an offencewhere the person does two or more particular acts, the offence isdeemed to have been committed even if some of those acts aredone outside Zambia.

216. Where, in accordance with this Act—(a) an act is required to be done within a particular period or

before a particular time and the obligation to do the actcontinues after the period has ended or the time haspassed; or

(b) failure or refusal to comply with the provision is an offenceand such failure continues; and

the person commits a separate offence for each day on which thefailure or refusal continues and shall be liable to an administrativepenalty for each day on which the failure or refusal continues or,on conviction, to a penalty prescribed by the Minister, by statutoryinstrument, for each day that the offence continues.

217. (1) A person who is convicted of an offence, in accordancewith this Act, shall have that person’s licence, registration,authorisation or recognition revoked or cancelled, as the case maybe, and may not be licensed, authorised, registered or recognised,in terms of this Act, for a period determined by the Commissionand may be barred from participating, in any manner, in anysecurities market on such terms and conditions as the Commissionmay determine.

(2) The Commission may, upon petition, review thedisqualification and bar and, for good cause shown, reduce theperiod, provided in terms of subsection (1).

218. (1) Where the Commission is satisfied, after dueinvestigation, or where a person admits that the person hascommitted an offence under this Act or regulations or rules, madein accordance with this Act, the Chief Executive Officer, maycompound the offence and impose an administrative penalty asspecified in subsection (2).


Continuingacts oroffences

Actions byCommissiononconvictionof offence

Administrativepenalties

Offencescommittedpartly inand partlyout ofZambia

(2) The Commission may impose any of the following penaltiesas an administrative penalty:

(a) a public or private censure or reprimand;(b) where a fine is provided for an offence, an amount of

money not exceeding fifty percent of the maximum ofthe fine; or

(c) where no penalty is provided for an offence, an amountof money to be determined by the Commission but notexceeding double the monetary gain to the person foreach contravention.

(3) If a person, on whom an administrative penalty is imposedin accordance with this section, fails to pay the penalty within thetime ordered by the Commission, the Commission may, recoverthe penalty by action in a court of competent jurisdiction.

219. Where an offence is committed by a body corporate oran unincorporate body, every director or manager of the corporateor unincorporate body is liable, on conviction, as if the director ormanager had personally committed the offence, unless the directoror manager proves to the satisfaction of the Court that the actconstituting the offence was done without the knowledge, consentor connivance of the director or manager or that the director ormanager took reasonable steps to prevent the commission of theoffence.

220. (1) The Commission may, by statutory instrument, makerules for or with respect to any matter that by this Act is requiredor permitted to be prescribed by the Commission, or that is necessaryto be prescribed for purposes of carrying out or giving effect to thisAct.

(2) Without prejudice to the generality of subsection (1), rulesmade under that subsection may make provision for—

(a) the conduct of business by licensed persons and theirrepresentatives;

(b) matters incidental to the licensing of any person underthis Act;

(c) the class of persons in relation to whom, and the mannerand circumstances in which, licensed persons and theirlicensed representatives may deal in securities;

(d) the types of securities in which licensed persons and theirrepresentatives may deal;

(e) the correction of any errors in any register or record keptin accordance with this Act;


Offence bybodycorporate orunincorporatebody

General rulesbyCommission

(f) particulars to be recorded for the purposes of this Act, inrelation to accounts of licensed persons;

(g) the lodgment of auditor’s reports and the information tobe contained in the auditor’s report;

(h) the lodgment by licensed persons of annual financialstatements;

(i) the forms to be used for the purposes of this Act, and themanner in which applications are to be made;

(j) the fees and charges to be levied and paid in respect ofany matter or thing required or permitted to be done forthe purposes of this Act;

(k) the exemption, on such terms and conditions as may beprescribed of any bank, financial institution or personfrom any specified provision of this Act or any rule madeunder this Act, and the revocation of any such exemptionor the modification of any such terms or conditions;

(l) administrative penalties to be imposed;(m) the types of business that the Commission considers as

constituting securities activities;(n) the authorization and conduct of credit rating agencies

and the rating of securities by the agencies;(o) maintenance of the confidentiality of clients of licensed

persons;(p) information and the matters to be displayed on business

stationery of licensed persons;(q) insurance by licensed persons against negligence or

default;(r) the issue of duplicate licences in case of loss or destruction;(s) dealings in securities including margin and position limits;(t) the practice and conduct of share registers;(u) the arbitration of disputes involving licensed persons;(v) the making of annual or other regulatory returns to the

Commission by licensed persons;(w) mandatory disclosures and registration of interests in

securities;(x) determination of fit and proper test for directors or licensed

persons;(y) anti-money laundering and countering the financing of

terrorism by licensed persons;


(z) any saving or transitional provisions the Commissionconsiders necessary or convenient to be made inconsequence of the enactment of this Act and therepealed Act; and

(aa) operation and management of a collective investmentscheme.

(3) The Commission may, by statutory instrument, make otherrules to provide for—

(a) the contents, form and issue of a prospectus, financialstatements, annual reports and other documents requiredor provided for in this Act;

(b) requirements for the display and use of unique numbersallocated for licences;

(c) securities requirements for transactions, includingrequirements prohibiting or restricting an issuer fromcommencing or carrying out business or applying fundsraised in an offering;

(d) the procedure for the clearance and settlement ofsecurities;

(e) categories of securities that shall be dematerialised;

(f) the formulation and publication of codes of conduct forlicensed persons, their officers and employees;

(g) the categorisation of collective investment schemes forthe purposes of this Act or any regulations made underthis Act;

(h) requirements for licensees to make reports to theCommission, securities exchanges, their clients orparticipants in the schemes, either regularly or on theoccurrence of specified events or circumstances;

(i) requirements for contents, publication and disseminationof reports to the Commission by —

(i) licensed persons;

(ii) officers and former officers of licensed persons;


(j) prudential rules, including rules as to capital adequacy,assets and other resources for licensed persons;

(k) disclosures to be made by licensed persons;(l) offer of securities through the electronic media;(m) keeping of books and records by licensed persons;(n) the transfer of business, contracts or other engagements

of a licensed person on insolvency or winding up;(o) the taking of fees and the levying of charges;(p) any form of trading of securities including turnaround

trading and short-selling, and lending and borrowing onsecurities;

(q) the criteria for declaration as publicly traded companies;(r) the de-registration of securities; and(s) the effective administration and implementation of this

Act.

(4) The Commission may issue rules prescribing thesegregation and safe custody of client moneys or other property.

(5) The Commission shall, before making the rules asprescribed in this section publish proposals for the rules in anewspaper or electronic media of general circulation and shall takeinto account any representations made to the rules.

221. (1) The Minister may, by statutory instrument, makeregulations as provided or required to be prescribed in this Act andas are necessary to give effect to the provisions of this Act.

(2) Notwithstanding the generality of subsection (1), theMinister may prescribe the—

(a) procedure and qualifications for licensing of dealers,investment advisers, share transfer agents andrepresentatives;

(b) procedure for applying for a licence and the grant,modification, renewal, transfer, suspension andrevocation of a licence;

(c) terms and conditions attaching to the application, grant,modification, refusal, renewal, transfer, suspension orrevocation of a licence;


Regulations

(d) performance standards relating to the issuance ofcertificates, record keeping and reporting;

(e) prompt and accurate creation of securities and thesafeguarding of securities and funds by share transferagents; and

(f) procedures for claims and access to the CompensationFund.

222. (1) The Securities Act, 1993 is hereby repealed.

(2) Notwithstanding the repeal of the Securities Act, 1993—

(a) any application pending before the Commission under therepealed Act shall be deemed to have been made to theCommission in accordance with the correspondingprovision of this Act and the Commission shall ensurethat the application complies with the provisions of thisAct and the applicant shall comply with any request ordirection of the Commission to ensure that therequirements stipulated in this Act, with respect to anapplication, are complied with;

(b) a licence, registration, authorisation or recognition grantedin accordance with the repealed Act, whether to acompany or an individual, shall be deemed, until expiry,revocation or cancellation of that licence, registration,authorisation or recognition, as provided in the repealedAct, to be a licence, registration, authorisation orrecognition granted in accordance with this Act, butsubject to any rights or benefits accruing, or any liabilitiessuffered, under the repealed Act, but without the rightof renewal;

(c) any investigation or proceeding commenced by theCommission and not concluded at the commencementof this Act may be continued by the Commission; and

(d) any directions given in accordance with the repealed Actshall, unless contrary to this Act, continue in force untilrevoked, in accordance with this Act.


Repeal ofSecuritiesAct andsavings andtransitionalprovisionsCap. 354

Cap. 354

(3) On and from the commencement of this Act, there shallbe transferred to, and shall vest in, or subsist against, theCommission, by virtue of this Act and without further assurance,all property, rights, liabilities and obligations that, immediately beforethe commencement of this Act, were the property, rights, liabilitiesand obligations of the Commission under the repealed Act.

(4) A securities exchange doing business before thecommencement of this Act shall continue to operate as a securitiesexchange as if licensed in accordance with this Act, but shall, withintwelve months of the coming into force of this Act, comply withthe licensing and other provisions of this Act.

(5) All capital markets operators licensed, registered, authorisedor recognised to do business in accordance with the repealed Actshall continue to operate as capital markets operators, but shall,within twelve months of the coming into force of this Act, complywith the licensing and other provisions of this Act.

(6) A company which at the commencement of this Act iscarrying on any activity as a venture capital fund shall make anapplication to the Commission, within a period of six months of thecommencement of this Act, in accordance with this Act and becompliant with this Act.

(7) All capital markets operators licensed, registered or doingbusiness, in accordance with the repealed Act, shall, within sixtydays of the establishment of the Association of Capital marketsOperators, become members of the Association.


FIRST SCHEDULE(Section 7)

THE SECURITIES AND EXCHANGE COMMISSION

PART IADMINISTRATION OF COMMISSION

1. (1) The seal of the Commission shall be such device as maybe determined by the Board and shall be kept by the Secretary.

(2) The affixing of the seal shall be authenticated by theChairperson or the Vice-Chairperson and the Secretary or oneother person authorised in that behalf by a resolution of the Board.

(3) Any document purporting to be a document executed underthe seal of the Commission or issued on behalf of the Commissionshall be received in evidence and shall be deemed to be so executedor issued, as the case may be, without further proof, unless thecontrary is proved.

2. (1) A member of the Board shall, subject to the provisionsof this Schedule, hold office for a term of not more than threeyears and may be appointed for a further term of three years,except that a member shall only hold office for two terms.

(2) Upon the expiration of the term for which a member isappointed the member shall continue to hold office until a successorhas been appointed, but in no case shall any such extension of theterm exceed three months.

(4) The office of a member becomes vacant—(a) upon the member’s death;(b) if the member is adjudged bankrupt;(c) if the member is absent, without reasonable cause, from

three consecutive meetings of the Board of which themember has had notice;

(d) upon the expiry of one month’s notice of the member’sintention to resign from office given by the member inwriting to the Minister;

(e) upon the expiry of one month’s notice of the member’sremoval given to the member in writing by the Minister;

(f) if the member becomes mentally or physically incapableof performing the duties of a member; or

(g) if the member is convicted of an offence under this Actor any other written law and is sentenced toimprisonment for a term of six months or more, withoutthe option of a fine.


Seal ofCommission

Tenure ofoffice andvacancy

(5) The Minister shall, where the office of a member becomesvacant, appoint another member in place of the member who vacatesoffice, and such member shall hold office for the remainder of theterm.

3. (1) Subject to the other provisions of this Act, the Boardmay regulate its own procedure.

(2) The Board shall meet for the transaction of business atleast once in every three months at such places and times as theBoard may determine.

(3) A meeting of the Board may be called by the Chairpersonupon giving notice of not less than fourteen days, and shall be calledby the Chairperson if not less than one third of the members sorequest in writing except that if the urgency of any particular matterdoes not permit the giving of such notice, a special meeting may becalled upon a shorter notice given by three members of the Board.

(4) There shall preside at any meeting of the Board—(a) the Chairperson;(b) in the absence of the Chairperson, the Vice-Chairperson;(c) in the absence of the Chairperson and the Vice-

Chairperson, such member as the members present mayelect for the purpose of that meeting.

(5) A decision of the Board on any question shall be by amajority of the members present and voting at the meeting, and inthe event of an equality of votes, the person presiding at the meetingshall have a casting vote, in addition to that person’s deliberativevote.

(6) Four members of the Board shall form a quorum at anymeeting of the Board.

4. There shall be paid to members of the Board or anycommittee such travelling and subsistence allowances, as theEmoluments Commission may determine.

5. (1) If a member or person is present at a meeting of theBoard or any committee of the Board at which any matter is thesubject of consideration, and in which matter that person or person’sspouse, relative, friend or associate is directly or indirectly interestedin a private capacity, that person shall, as soon as is practicableafter the commencement of the meeting, declare such interest andshall not, take part in any consideration or discussion of, or vote on,any question relating to that matter.


Proceedingsof Board

Allowancesfor members

Disclosure ofinterest

(2) A disclosure of interest made under this section shall berecorded in the minutes of the meeting at which it is made.

6. (1) A person shall not, without the consent in writing givenby, or on behalf of, the Board, publish or disclose to any unauthorisedperson, otherwise than in the course of duties of that person, thecontents of any document, communication or informationwhatsoever, which relates to or which has come to the knowledgeof that person in the course of that person’s duties under this Act.

(2) A person who contravenes subsection (1) commits anoffence and is liable, on conviction, to a fine not exceeding twohundred thousand penalty units or to imprisonment for a period notexceeding two years, or to both.

(3) A person who, having any information which to theknowledge of that person has been published or disclosed incontravention of subsection (1), unlawfully published orcommunicates the information to any other person, commits anoffence and is liable, on conviction, to a fine not exceeding twohundred thousand penalty units or to imprisonment for a period notexceeding two years, or to both.

7. An action or proceeding shall not lie or be instituted againsta member of the Board or a committee of the Board for, or inrespect of, any act or thing done or omitted to be done in good faithin the exercise of or performance, or purported exercise orperformance of any of the powers, functions or duties conferredunder this Act.

PART IIFINANCIAL PROVISIONS

8. (1) The Commission shall be funded by—(a) such sums as may be payable to the Commission from

moneys appropriated by Parliament for the purpose;(b) such sums as may be payable to the Commission under

this Act or any other written law;(c) such sums as may be levied by the Commission in terms

of licence fees, transactions and any other leviesimposed; and

(d) such sums of money or such other assets as may accrueto or vest in the Commission whether in the course ofthe exercise of its functions or otherwise.


Prohibitionofpublicationof, ordisclosure of,informationto anunauthorisedpersons

Immunity ofmembers andstaff

Funds ofCommission

(2) The Commission may —

(a) accept moneys by way of grants or donations from anysource in Zambia; and

(b) and subject to the approval of the Minister, accept moneysfrom any source outside Zambia.

(3) There shall be paid from the funds of the Commission —

(a) where appropriate, salaries, allowances, loans, gratuitiesand pensions of staff of the Commission, and otherpayments for the recruitment and retention of staff;

(b) such reasonable travelling and subsistence allowances forstaff, members of the Commission and members of anycommittee of the Commission, when engaged on thebusiness of the Commission, at such rates as theCommission may, with the approval of the Minister,determine; and

(c) any other expenses incurred by the Commission in theperformance of their functions.

(4) The Commission shall perform its functions in accordancewith sound financial principles and shall ensure as far as possiblethat its revenue is sufficient to meet expenditure properly chargeableto revenue.

(5) The charge or fee imposed on any services and facilitiesrendered by the Commission shall be reasonably related to expensesincurred, or to be incurred, by the Commission in relation to theprovision of the service or facility.

9. The financial year of the Commission shall be the period oftwelve months ending on 31st December in each year.

10. (1) The Commission shall cause proper accounts to be keptof its assets and liabilities and of its income and expenditure foreach financial year.

(2) The accounts of the Commission for each financial yearshall be audited by one or more persons who publicly carry on theprofession of accountants in Zambia, and who shall be appointedauditors to the Commission by the Commission with the approvalof the Minister.

(3) The auditor’s fees shall be paid by the Commission.


Financialyear

Accounts andaudit

11. (1) As soon as practicable, but not later than one hundredand eighty days after the end of the financial year, the Commissionshall submit to the Minister a report concerning its activities duringthe financial year.

(2) The report referred to in subsection (1), shall includeinformation on the financial affairs of the Commission and thereshall be appended to the report—

(a) audited financial statements;

and

(b) such other information as the Minister may require.

(3) The report to be submitted in accordance with subsection(1), shall include the following:

(a) the extent to which the Commission has fully implementedits regulatory oversight functions as provided under thisAct and in its rules and the effectiveness of the operationof such regulatory oversight function;

(b) the actual and projected cost savings to the Government,if any, resulting from operations of the Commission;

(c) the actual and projected costs which the Commission andthe public would have incurred if the Commission hadnot undertaken regulatory responsibility for certain areasunder the Commission’s jurisdiction;

(d) the nature of the working relationship between thesecurities exchanges, clearing and settlement facilitiesand the Commission;

(e) an assessment of the actual and projected efficiencies theCommission has achieved or expects to be achieved asa result of the continuing regulatory activities of theCommission; and

(f) the immediate and projected capabilities of the Commission.

(4) The Minister shall, not later than seven days after the firstsitting of the National Assembly next after receipt of the reportreferred to in subsection (1), lay the report before the NationalAssembly.


Annualreport

SECOND SCHEDULE(Section 22)

REQUIREMENTS TO BE MET BY APPLICANTS FOR SECURITIES

EXCHANGE LICENCE

For the purposes of section twenty-two, the requirements are asfollows:

1. The applicant shall have financial resources sufficient forthe proper performance of its functions.

2. At least five of the applicant’s members shall be personsengaged in carrying on the business of dealing in securitiesindependently of and in competition with each other.

3. The rules and practices proposed to be followed by theapplicant shall be such as ensures that business conducted by meansof its facilities are conducted in an orderly manner and so as toafford proper protection to investors. In particular, the rules of theproposed exchange shall make such provisions as the Commissionconsiders satisfactory with regard to—

(a) efficient, honest, fair, competitive and informed trading insecurities;

(b) the qualifications for membership of the proposedexchange;

(c) the exclusion from its membership of persons who arenot of good character and business integrity, and thesuspension or disciplining of members for conductinconsistent with just and equitable principles in thetransaction of business or for contravention or failure tocomply with the rules of the proposed exchange or theprovisions of this Act;

(d) the conditions governing dealings in securities by membersof the proposed exchange, and the class or classes ofsecurities that may be dealt in by members;

(e) the carrying on the business of the securities exchangewith due regard to the interests of the public; and

(f) preventing a member of the proposed exchange fromresigning where the proposed exchange intends toinvestigate any matter affecting that member or any ofthe member’s representatives for the purpose of decidingwhether to expel or to take disciplinary action againstthat member.


4. The applicant has made such provision as the Commissionconsiders satisfactory for—

(a) clearing and settlement of dealings in securities ties toensure that performance of transaction effected on theproposed exchange, and for the recording of suchtransactions;

(b) the effective monitoring and enforcement of compliancewith its rules and the provisions of this Act and the rulesmade under this Act; and

(c) investigating complaints in respect of business transactedby any of its members.

5. The applicant shall be able and willing to promote andmaintain high standards of integrity and fair dealing by its members.

6. The applicant shall have good corporate governancestructures at Board and management levels so as to be able to putin place including the requirement that independent members ofthe Board should be in the majority in comparison to tradingmembers.

7. A Security clearance shall be undertaken before theappointment of Board members and management.

8. Where the Board is of the view that the securities exchangeboard is not upholding the requirements specified in this Act theCommission shall have powers to dissolve the securities exchangeboard.


The Securities Act, 2016

Documents

Transcript of The Securities Act, 2016